Will auto-enrolment affect PRSA tax relief?

[mc_arigead]

In a personal finance questions answered piece in the Independent a few days ago, the author suggests that PRSA's where employer is not making contributions will no longer be able to avail of tax relief. Link here, but it's for subscribers only I think.

Your personal finance questions answered – Should I put €55,000 in savings into a Revolut deposit account?

Q My partner and I are 38 and have saved €55,000 for a deposit for a house. We’re hoping to buy soon, though we’ve been outbid on every property we’ve been interested in. The money is currently sitting in a deposit account at one of the main banks, but is earning just 2pc interest. I recently...

www.independent.ie

Not sure if I'm allowed copy in the full article text but the relevant text is:

My advice would be to ask your employer to pay into your PRSA before auto-enrolment commences and then see what the final details of the scheme are. While all the details of auto-enrolment have yet to fully ironed out, at present it looks like you will not be able to claim tax relief on a pension (PRSA) that your employer doesn’t contribute to.

Anyone know what the basis for this claim is?

 

[Towger]

To cut a long story short. It was 'discovered' that due to the way the PRSA legislation was worded, Employer Contributions to PRSAs are a BIK.
Revenue currently give a 'dispensation' to this, so PRSAs are currently treated for Income Tax/USC/PRSI the same as a normal Employer Pension.
I would not worry about what it says in the article, and at the rate things are progressing, AE is still a few years away!

 

[mc_arigead]

Thanks @Towger, but the way I read the article it looked to me like they were saying that if I have a PRSA and my employer doesn't contribute then I will loose tax relief. Doesn't make a whole lot of sense and would seem to penalise people who were prudent enough to provide for their own retirement but are too old to benefit from an auto-enrolment scheme.

 

[Towger]

It makes no sense, i think the journalist is confused.
They may be trying to say having an AE pension will end up better than a PRSA.

 

[GSheehy]

As it stands, it's factually correct.

Anyone who isn't in a salary deduction scheme will automatically be enrolled in one and it could affect what provisions you're making yourself. Even the company directors that have reached SFT.

It's a long way off. Department are going on a solo run. There will be changes/amendnents.

Do not do anything until full details of AE are published. There would be a lot of pension poor people in the Country if they were waiting to see the final AE product, thinking it might be better for them.

 

[Towger]

AE is still at least a couple of years away.

 

[mc_arigead]

Thanks. I'm in the process of setting up a pension. I have an old RAC that is not worth investing any money into to due to the charging structure. If I go the salary deduction route for PRSA with employer will that cover me for:

Anyone who isn't in a salary deduction scheme will automatically be enrolled in one

I'm hoping my employer will contribute too but the salary sacrifice issue is a concern. If my salary doesn't change and the amount they contribute to PRSA is the same or less than I do then will that rule out any salary sacrifice concerns. I'm pushing 50 now so clock is ticking and I need to get something in place regardless.