Utilise the PRSA Now Before it’s Too Late!

It is rumoured that tax-free limits around pensions, specifically in relation to employer contributions to PRSAs could face future restrictions in the upcoming finance acts.

Currently the only limit on large contributions to PRSAs is the €2 million Standard Fund Threshold, which effectively frees up an employer to pay more employer contributions into an employee’s PRSA, should they wish to and be in a position to do so.

These tax rules which have been in place since January 1st 2023, have been criticised by Sinn Fein as “being exploited by the wealthiest in our society”.

However, we believe these new rules even out the playing field around tax relief for PRSAs so that the same level of tax relief is available to workers over their entire working life, regardless of their gender or employment type. Essentially, an employee will have a better chance of building up a reasonable pension pot if they have employer contributions going into their pension as well as their own personal contributions.

These funding rules, as they currently are, could have huge potential to boost the pensions of women or men who have taken time out of the workforce to rear children, or entrepreneurs who have spent years reinvesting in their business but waited to the latter part of their careers to contribute to a pension.

If funding restrictions are brought back in, this will make it more difficult for these workers to make up lost time in terms of pension savings. For this reason, we think it is timely to look at the PRSA and the solutions it can provide now before it’s maybe too late.

Source: ITC, 19th of August 2024. 

As a Financial Planning / Advisor Firm in Louth we are available to discuss any and all queries that you may have in relation to Education Planning. Arrange a meeting by clicking this link to my Calendly Diary, emailing info@smartfinance.ie or calling 087 8144 104.

Smart Finance Life Planning Ltd., Bawntaaffe, Monasterboice, Drogheda, Co. Louth. A92 E2V3.