Setting up PRSA alongside employer based scheme

[Chewbacca]

Presently in my employers scheme and looking to set up a PRSA to run alongside this to hopefully max out age related contribution % as far as possible.

I am interested in setting up a PRSA where I can make contributions into self managed equities , maybe index/tracker funds. Is this possible in Ireland? If my self managed PRSA contributions were 10-15% in addition to my occupational scheme, am I right in thinking I could make monthly contribution monthly or total for the year to that level and then I would get the tax relief by submitting my annual tax return. Is it possible to get adjusted tax code so that tax is effectively correct each month or are you reliant on paying in the 'Gross' percentage amount and then availing of the tax relief by submitting annual tax return?

Is it possible to have more than one personal PRSA? For sample I have seen reference to Standard Life providing a PRSA, could one have a provider fund and a self managed one as well, is there a limit on how many PRSAs you can have?

Not too familiar with PRSA, pension planning in Ireland, apart from reading threads here, would anyone recommend any resources, be they books, websites, etc? Thank you

 

[ClubMan]

Presently in my employers scheme and looking to set up a PRSA to run alongside this to hopefully max out age related contribution % as far as possible.

Sounds like you're referring to an AVC PRSA?

PRSA as an AVC - pensionsauthority

If you are a member of an occupational pension scheme in the private or public sector, you can make additional voluntary contributions (AVCs) to a personal retirement savings account (PRSA).

pensionsauthority.ie

Why wouldn't you just max your contributions to the occupational scheme?

I am interested in setting up a PRSA where I can make contributions into self managed equities ,

Why "self managed" especially if you're looking at index trackers which are passive investments? You should probably resist the temptation to micromanage your pension (in an attempt to beat the market/index?) as excessive (day)trading/find switching is most likely a recipe for missing out on long term growth compared to just investing in an appropriate asset class/fund and sitting on it long term without messing with it.

maybe index/tracker funds. Is this possible in Ireland?

Access to a global index tracker through an AVC?

There aren't many places one can get access to a passive global index through an AVC....I know (at least I think I know) there is currently one that suits my situation unless I want to have to pay very high charges for other routes I heard one of the larger life/pension companies intends to...

www.askaboutmoney.com

If my self managed PRSA contributions were 10-15% in addition to my occupational scheme, am I right in thinking I could make monthly contribution monthly or total for the year to that level and then I would get the tax relief by submitting my annual tax return.

Yes.

Is it possible to get adjusted tax code so that tax is effectively correct each month or are you reliant on paying in the 'Gross' percentage amount and then availing of the tax relief by submitting annual tax return?

Unless all pension contributions are done via payroll I think that you may be restricted to claiming relief after the fact via your myAccount "Form 12" return.

Is it possible to have more than one personal PRSA? For sample I have seen reference to Standard Life providing a PRSA, could one have a provider fund and a self managed one as well, is there a limit on how many PRSAs you can have?

You can have more than one but I think that you can only have a maximum of one taking active contributions at any one time.

Not too familiar with PRSA, pension planning in Ireland, apart from reading threads here, would anyone recommend any resources, be they books, websites, etc? Thank you

Welcome to the Pensions Authority - pensionsauthority

The Pensions Authority regulates occupational pension schemes, trust retirement annuity contracts (RACs) and personal retirement savings accounts (PRSAs). Our website provides you with access to a comprehensive range of information and guidance material to help you understand pensions. The...

pensionsauthority.ie

And the many existing pension threads here on Askaboutmoney.

 

[Chewbacca]

Sorry I don't; how you do multi quote replies on a message (how?)

• AVC PRSA - I guess yes if that's what you call it, in addition to my normal occupational scheme
• I was considering maxing contributions to occupational scheme (Aon) until I read that I could have my own scheme in addition, also Aon is presently balanced and other scheme , I'm not sure to what extend you can self manage, select alternative funds and adjust. In addition , I do not see myself long term at current company so useful to have something running alongside.
• Self manage/index funds probably to have an element of more active involvement and also to deal with implication of changing role and having to start a brand new pension with a difference occupational scheme (outside of main scheme)
• Re tax relief I suspect you are right
• Thanks for other replies as well

Also I believe if changing employer you can move/bring your existing pension from previous employer (less any employer contributions that might be clawed back) without any charges is this correct, thus retaining any personal contributions and tax relief. Does this also apply if contributing less than two years?

 

[ClubMan]

Sorry I don't; how you do multi quote replies on a message (how?)

Key Post - Replying to a post - quoting all of it; quoting a bit of it; quoting none of it

1) You can reply without quoting the post you are replying to This should be the one you use most often. 2) You can quote the entire post Please do not use this automatically Please do not use this to quote very long posts It's best to use this in a long thread where you are quoting a post...

www.askaboutmoney.com

• also Aon is presently balanced and other scheme , I'm not sure to what extend you can self manage, select alternative funds and adjust.

What do you mean by "is presently balanced and other scheme"? Do you mean that it has a default investment option that you think is too conservative for your age/needs? If so then it's usually possible to override this and choose a more appropriate (e.g. high/100% equity, maybe index tracking fund) fund for the likelihood of better long term returns. And maybe to switch funds from time to time. Although I'd caution against meddling with this too much as I've already said.

You probably need to check what the charges and investment fund selection and switching options are with the occupational scheme before you do anything.

If you do decide to open an AVC PRSA in parallel then you need to have clearly defined reasons for doing so. Simply maximizing your contributions to the occupational scheme may be the simplest and more appropriate option.

• In addition , I do not see myself long term at current company so useful to have something running alongside.

After two years (or maybe shorter term at the discretion of the occupational scheme?) preserve your occupational scheme benefits even if/when you leave.

If you think that you won't be with the company for less than two years and you can't preserve/transfer the occupational scheme benefits at that stage then that made be a good reason to have an AVC PRSA alright.

I presume that the company is matching employees' contributions to the occupational scheme up to some level which is usually a good reason for participating?

Preservation of benefits - pensionsauthority

Preservation is a term defined in the Pensions Act to refer to a requirement for occupational pension schemes to maintain benefits for members after they leave. The same principle applies in relation to personal retirement savings accounts (PRSA) and personal pensions.

pensionsauthority.ie

Refund of member contributions - pensionsauthority

In certain circumstances you may be eligible to take a refund of contributions paid into a pension arrangement. Your entitlement to a refund of contributions depends on the type of pension arrangement you have and the rules attaching to refunds of contributions.

pensionsauthority.ie

• Self manage/index funds probably to have an element of more active involvement and also to deal with implication of changing role and having to start a brand new pension with a difference occupational scheme (outside of main scheme)

As I've said, other than occasionally (if even then) switching funds, I think that you should think twice about trying to be too hands-on in this respect. It's more important to choose a pension with competitive/low charges, choose a (usually high/100% equity fund/index tracker), and then just stick the money in and forget about it long term and let it grow rather than trying to do any sort of Warren Buffet cosplaying with your pension.

Also I believe if changing employer you can move/bring your existing pension from previous employer (less any employer contributions that might be clawed back) without any charges is this correct, thus retaining any personal contributions and tax relief. Does this also apply if contributing less than two years?

See the links that I posted above.

 

[GSheehy]

It's odds on that the AMC on the scheme is lower than a stand-alone AVC PRSA. I'd also be quietly confident that the fund list that you may have been given to choose from/default to wasn't extensive. But if you ask, you'll get a list that includes the type of fund you're looking for.

There's this mad notion over on Redditt that you somehow become a master of your pension universe is you can get your hands on a 'self-managed' pension (used to be Davys but now all that's up in the air). It's a misnomer. Choosing a 100% equity index tracker on a pension, as opposed to an actively managed mixed asset fund (that's probably in line with your risk profile), is not self-managing your pension.

The posters there are conflating self-managed with self-directed. The latter refers to a pension where you direct your (realistically €300,000+) pension contribution/s into individual shares, ETFs, property etc.. And, you will not buy into one of those for a cost less than what you're goimg to pay via the main scheme or a stand-alone AVC PRSA from a product provider.


Gerard

www.prsa.ie

 

[ClubMan]

Just curious - do (m)any occupational schemes allow preservation of benefits (remaining in the scheme or transferring out to a buy out bond or whatever) if the employee leaves with less than 2 years pensionable service or is the only option to take a refund after taxes?

 

[ClubMan]

There's this mad notion over on Redditt that you somehow become a master of your pension universe is you can get your hands on a 'self-managed' pension (used to be Davys but now all that's up in the air). It's a misnomer. Choosing a 100% equity index tracker on a pension, as opposed to an actively managed mixed asset fund (that's probably in line with your risk profile), is not self-managing your pension.

The posters there are conflating self-managed with self-directed. The latter refers to a pension where you direct your (realistically €300,000+) pension contribution/s into individual shares, ETFs, property etc.. And, you will not buy into one of those for a cost less than what you're goimg to pay via the main scheme or a stand-alone AVC PRSA from a product provider.

That's interesting and a tad worrying. In particular I'd worry about individuals thinking that they can make a killing and beat the markets/indices by trying to micromanage their pension investments, game the system, time the market, churn their own pension between funds in a day trading sort of style etc. when they'll probably just end up sabotaging their own returns. Better to just use a pension with low/competitive charges, select a high/all equities fund (maybe ideally an index tracker), contribute as much as your circumstances allow, and leave it alone.

 

[Fortune]

That's interesting and a tad worrying. In particular I'd worry about individuals thinking that they can make a killing and beat the markets/indices by trying to micromanage their pension investments, game the system, time the market, churn their own pension between funds in a day trading sort of style etc. when they'll probably just end up sabotaging their own returns. Better to just use a pension with low/competitive charges, select a high/all equities fund (maybe ideally an index tracker), contribute as much as your circumstances allow, and leave it alone.

Good luck day trading on a pension. Mercer only process switches once a month on my pension scheme

 

[ClubMan]

Good luck day trading on a pension. Mercer only process switches once a month on my pension scheme

I was referring to people who (perhaps mistakenly) think that they can effect investment/fund switches regularly in order to game/time the market. Not literally day trading. That was just a metaphor.

 

[Gordon Gekko]

Company schemes tend to be cheaper and there’s nearly always a satisfactory equity fund that should perform broadly in line with the market.

Managing one’s own pension fund is wasted time and effort in my view.