PRSAs and working outside of Ireland

  • Thread starter Little Skellig
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Little Skellig

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Hi,

I'm a PRSA novice, so excuse me if I'm asking a really dumb question here...

I'm interested in starting a PRSA. In fact. I've been meaning to set one up for about a year now, but because I'm so clueless about financial matters, I get easily distracted.
This time, however, I'm going to persevere!

Anyhow, my main query is: if you set up a PRSA while working in Ireland and you subsequently move abroad to work, what happens to your PRSA?
Are you allowed to continue your contributions?
If so, are there penalties or other knock-on effects?
Does it depend on what type of employment you take up abroad? (ie contract or permanent)
Can anyone shed any light on this?

Currently I'm working on a short term contract and have been employed on that basis since leaving college a few years ago.
So a PRSA sounds like just the product for someone in my position, except that in my case there is the added complication that I wish to move abroad over the next year, (possibly to Belgium or the UK, if that information is useful).

I have been reading through the PRSA section on this site and it sounds like there are some good deals out there. However, I can't advantage of any of them until I clarify what the future of my PRSA would be if I move abroad.

Apologies if this issue has already been addressed. If so can someone point me to the thread.

Thanks,

Clueless and confused.
 
Can't answer your substantive query but...

> This time, however, I'm going to persevere!

If you can start a PRSA or personal pension before 31st October then you will be able to make a lump sum contribution in respect of the previous tax year up to the relevant age related tax/PRSI exemption limits and claim full tax/PRSI back on it.



Worth bearing in mind but make sure that you shop around for the best and most suitable deal all the same and don't rush things.

Claiming PRSI back is still a bit of a rigmarole though because SW still don't seem to have the required procedures in place...
 
Thanks for that Unregistered.
That's a good deal. Hopefully I'll be in the know by then and will be in time to sign up.
 
PRSA while abroad

LS

There is nothing to stop you making contributions to a PRSA when you are abroad. However, remembers, you may not get tax releif on them (though its worth trying with the tax authorities in the country you are in: if it is in the EU, you may be lucky). If you come back to Ireland at a later date and have IRish taxable income, you can set the previous PRSA contributions against that income.

Hope that helps.

d
 
Re: PRSA while abroad

Little Skellig

First of all, why are you starting a PRSA at all?

The main reason is that it is a tax efficient way of saving for your future. If it is not tax efficient, there is no point in putting your money into a PRSA. While you are abroad, you are unlikely to get tax relief in Ireland or in the other country on contributions to an Irish PRSA, so don't bother. If you are abroad for only a few years, forget about your pension. Start contributing again when you come back.

I view pensions as part of a person's financial planning when they are fairly sure of their immediate and medium term future. Your future is uncertain. You may be in Ireland. You may be abroad. You may have a good income or you may need access to your savings.

A PRSA is very inflexible - you cannot access your money until you are 50 or dead. Your profile suggests that you may need access to your money in the near future. Forget about PRSAs until your career and residence are a bit more predictable.

There may also be a more tax efficient and flexible way of saving in the country you end up in.

Brendan
 
> If it is not tax efficient, there is no point in putting your money into a PRSA.

Brendan - are you sure that imparting such absolutist advice is prudent? Obviously it is important to weigh up the tax (dis)advantages of any investment mechanism/product - not least of all pensions - but surely even the tax issues should not necessarily deflect from the fact that pension savings are primarily geared towards building up retirement income/means. I understand the point about the disadvantages of "saving" 20% tax now only to pay 42% at retirement but surely it's not as simple as all that - especially when one can take a 25% lump sum tax free....?!? Or maybe I'm missing something (possibly obvious) in this context....
 
I am not against saving for retirement. Little Skellig should save for retirement, but just not via a pension fund. She needs flexibility, not tax relief.

Brendan
 
OK - I thought that it was general advice and not simply specific to this particular query. Maybe it's just me but sometimes I get worried when I read some of what seem like your more absolutist recommendations... ;)
 
I suppose I prefer being absolutist than being wishy washy. I hope that when I am being absolutist, I give the reasons for my views. Then, Little Skellig or anyone else is free to agree with the reasons and conclusions or not.

It is far more common to see such absolutist views as "You cannot start a pension too young", which is absolute nonsense.

Brendan
 
Thank you both for your comments. I am disappointed to learn that a PRSA is not really worth it if I contribute from abroad, as I thought that a PRSA was the solution to my dilemma.
I may well take your advice Brendan and hold off and see what schemes exist in the country I move to (probably the UK, or Belgium, as I said before).
If I took out a pension in one of those countries, do you think I can move it back to Ireland when I return in a few years time?

Or...should I just save my own pension? Do you need to be part of a scheme to see your money grow?

Are there other alternatives?

Any more advice out there would be appreciated!

Brendan I take your point that someone in my uncertain position should maintain as much financial flexibility as possible.

I would not intend on making large contributions to a pension scheme, rather I would make modest payments for the time being to get me started and increase them as time goes by.

My parents are concerned for my future and are pressuring me to get a pension sorted out. They mean well but their anxiety is rubbing off on me!

It seems a shame to me that going off, enjoying life and living and working flexible seems to be at odds with making provision for later life. Shouldn't some sort of EU-wide/Eurozone-wide pension scheme be introduced?

Thanks,
Little Skellig
 
> Are there other alternatives?

Perhaps open a pension in the country to which you travel to work assuming that there are tax advantages and that you can subsequently transfer the pension or draw down pension benefits without hassle/charges in the future?

> My parents are concerned for my future and are pressuring me to get a pension sorted out

This could well be a case of what Brendan mentioned earlier "it's never too early to start a pension" instead of focusing on the real issue of "it's never too early to save (perhaps for a house if applicable)"?

Have you read the AAM Guide to Savings & Investments for more background on this and the relevant issues to consider?

www.askaboutmoney.com/guide/index.htm
 
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