personal retirement savings accounts (prsas) – a ......prsas are generally low cost, easy-access...
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
www.pensionsboard.ie
Copyright: The Pensions Board and Consumers’ Association of Ireland.
Researched, written and compiled by the Consumers’ Association of
Ireland in conjunction with the Pensions Board.
Consumers’ Association of Ireland
43 - 44 Chelmsford Road
Dublin 6
Tel (01) 497 8600
Website www.thecai.ie
Email [email protected]
The Pensions Board
Verschoyle House
28-30 Lower Mount Street, Dublin 2
Tel (01) 613 1900
Fax (01) 631 8602
Email [email protected]
www.pensionsboard.ie
The Pensions Board has prepared this booklet in conjunction with the Consumer
Association of Ireland for the benefit of persons interested in PRSAs. We have made
every effort to ensure that it is correct, however, no liability whatsoever is accepted
by the Pensions Board, its servants or agents for any errors or omissions in the
information contained in this booklet or for any loss occasioned to any person
acting or refraining from acting as a result of any statement in this booklet.
© The Pensions Board, 2007. All rights reserved.
www.pensionsboard.ie
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Contents
1. Introduction 2
2. PRSABasics 4
3. GettingmyPRSA 7
4. ContributingtomyPRSA 15
5. InvestingmyPRSA 19
6. GettingmyPRSABenefits 22
7. PRSACharges 25
8. Complaints 27
9. QuickTipsonPRSAs 29
10. Examples 31
11. UsefulContacts 33
12. GlossaryofTerms 37
Appendix1–Sample 39
PreliminaryDisclosureCertificateforaStandardPRSA
Appendix2–Sample 44
StatementofReasonableProjectionforaPRSA
�. Introduction
ThisbookletisaconsumerguidetoPersonalRetirementSavings
Accounts(PRSAs).Itshowsyouhowtoapproach,searchandapply
for,andmonitoryourPRSA.Indoingso,wehopeithelpsyouto
understandandmakeinformedchoicesaboutPRSAs.
ThelegislationbehindPRSAsisthePensions(Amendment)Act,2002.
ThisActwasmadelawon13April2002.Itintroducedtheframework
forPRSAsandtheirrelevantarrangements,rulesandtaxreliefs.
TheActalsoallowedfortheestablishmentofaPensionsOmbudsman.
ThePensionsOmbudsmanhasthepowertoinvestigateandresolve
complaintsaboutPRSAsandoccupational pension schemes.MrPaul
KennywasappointedasthePensionsOmbudsmanon6March2003
(seePart 11).
PRSAsaregenerallylowcost,easy-accessprivatepensionsavings
accounts.Theyaredesignedtoallowpeoplesaveforretirement
flexibly,tobeownedbyindividuals(regardlessofemploymentstatus),
transferablefromjobtojob,andavailablefromavarietyofproviders.
ThisbookletisproducedbytheConsumers’AssociationofIreland
(CAI)andthePensionsBoard.CAIisanindependent,non-profitand
non-governmentorganisationworkingonbehalfofIrishconsumers.
Itsaimistorepresentconsumersandmakesuretheirneedsas
consumersofgoodsandservicesaregivenhigherpriority.The
PensionsBoardwasestablishedbytheMinisterforSocialWelfare
underthetermsofthePensionsAct,1990.Itsmainfunctionas
setoutinthatActandamendinglegislationincludesmonitoring
andsupervisingtheoperationofthePensionsActandpension
developmentsgenerally,includingtheactivitiesofPRSAproviders,
theprovisionofPRSAproductsandtheoperationofPRSAs.
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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ThePensionsBoardandtheRevenueCommissionersarejointly
responsibleforapprovingPRSAproducts.ThePensionsBoard
supervisestheactivitiesofPRSAprovidersinrespectoftheir
approvedproductsandmonitorscompliancewiththePRSA
legislation.SinceFebruary2003,theBoardhasapproved62
productsfrom10providers:27oftheseareStandardPRSAsand
35arenon-Standard.AlistofPRSAprovidersandtheirapproved
productsisavailableontheBoard’swebsiteonwww.pensionsboard.ie.
ThisbookletcontainsalistofFrequentlyAskedQuestions(FAQs)
forconsumerswhoareconsideringbuyingaPRSA.Throughoutthe
booklet,youwillfindtermsprintedinitalics.Theseareexplained
intheGlossary(seePart 12).
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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�. PRSA Basics
n What is a PRSA?
A PRSA is:
n Apersonalpensionplanthatyoutakeoutwithanauthorised
PRSAprovider,
n likeaninvestmentaccountusedtosaveforyourretirement,
n atypeofdefined contribution schemewhereyoumakeregular
contributionstoyourpension,whicharetaxdeductible,
dependingonyourage,
n aflexiblepensionthatallowsyoutoincrease,decreaseorstop
yourcontributionsatanytimewithoutanychargeorpenalty
fordoingso,
n aportablepensionthatcanbecarriedfromjobtojobor
transferredtoanotherPRSAprovider,withoutanycharge
orpenaltyfordoingso,
n apersonalpensionplanthatgivesyouflexibilityindrawing
downbenefitsatretirementageincludingthefacilitytocontinue
contributionswhiledrawingbenefits,
n apersonalpensionplanprovidingyouwithregularinformationto
allowyoumonitoritsperformanceandsuitabilitytoyourneeds.
n Who can take out a PRSA?
PRSAsareavailabletoyouregardlessofyourjoboremployment
status.Therefore,youcangetaPRSAifyouareapart-timeorcasual
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
employee,ahighly-paidprofessional,self-employed,ahomemaker,
acarer,acontractor,anemployer,anemployee,apartnerina
partnership,orajobseeker.
YoucancontinuetocontributetoaPRSAafteryourretirement,
aslongasyouarenotaged75andover.
n What types of PRSAs are available?
TherearetwotypesofPRSA:aStandardPRSAandanon-Standard
PRSA.Themaindifferencesbetweenbothtypesarethechargesand
investmentoptions.
IfyouhaveaStandardPRSA,you:
n cannotbechargedmorethan5%onthecontributionsyoupayand
1%ayearonthemanagedfunds.(YourPRSAprovidercancharge
aslittleorasmuchasitlikes,uptothesemaximumlevels.),
n canonlyinvestinpooled funds,exceptfortemporary cash holdings,
and
n donothavetobuyanotherproduct,suchaslifeassurance,
whenyouareapplyingforyourStandardPRSA.(AStandardPRSA
maynotbemarketedorsoldifthepurchaseoftheproductis
conditionalonsomeotherproductbeingpurchased).
Ifyouhaveanon-StandardPRSA,thereisnolimitonchargesandyou
caninvestinarangeoffundsincluding(butnotrestrictedto)pooled
funds.
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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n Who contributes to my PRSA?
YoucontributetoyourPRSA.Ifyouareanemployee,youremployer
maycontributebutisnotobligedtodoso.
n Is my PRSA risk-free or backed by any Government guarantee?
No,yourPRSAisnotrisk-freeorbackedbyanyGovernmentguarantee.
Likeotherpersonalpensionsanddefined contribution schemes,your
PRSAisaninvestmentaccountthatprovidesforyourretirement.
ThismeansthatthevalueofyourPRSAcanincreaseordecrease,
dependingontheperformanceofyourPRSA’sinvestmentfunds.
Likewise,ifyouremployerprovidesyouwithaccesstoaStandard
PRSA,youremployerisnotresponsiblefortheinvestment
performanceofyourStandardPRSA.However,thismaynotbethe
casewheretheemployerprovidesaccesstoanon-StandardPRSA.
n Who regulates PRSAs?
ThePensionsBoardandtheRevenueCommissionersarejointly
responsibleforapprovingPRSAproducts.TheBoardsupervisesthe
activitiesofprovidersinrelationtotheirapprovedproductsand
monitorscompliancewithPRSAlegislation.TheFinancialRegulator
isresponsibleforprudentialsupervisionofPRSAprovidersandthe
supervisionofthesalesprocessofapprovedproducts.
TheBoardalsomaintainsapublicregisterofPRSAprovidersandtheir
approvedproductsontheBoard’swebsitewww.pensionsboard.ie.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
�. Getting my PRSA
n Where can I get a PRSA?
TogetyourPRSA,youmustenterintoacontractwithanauthorised
PRSAprovider.AuthorisedPRSAproviderscanincludeinvestment
businessfirms,insurancecompaniesandcreditinstitutions.There
arecurrently10PRSAproviderswith62approvedproducts.
ApprovedPRSAproductsareavailablefrom:
n Ark Life–1StandardPRSA.
n New Ireland/Bank of Ireland Life–3StandardPRSAsand
3non-StandardPRSAs.
n Canada Life–4StandardPRSAsand4non-StandardPRSAs.
n Custom House Capital–2non-StandardPRSAs.
n Eagle Star Life–6StandardPRSAsand11non-StandardPRSAs.
n EBS Building Society–2StandardPRSAs.
n Friends First Life–2StandardPRSAsand4non-StandardPRSAs.
n Hibernian Life–2StandardPRSAsand3non-StandardPRSAs.
n Irish Life–7StandardPRSAsand5non-StandardPRSAs.
n Standard Life–3non-StandardPRSAs.
PRSAsarealsoavailableindirectlythroughagentsauthorisedtosell
PRSAproductsontheaboveproviders’behalf.
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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YoucangetalistofapprovedPRSAproductsandtherespective
providersonthePensionsBoard’swebsite(www.pensionsboard.ie).
n Where do I get my PRSA documents?
YourPRSAproviderprovidesyouwithyourdocuments.Ifyoudonot
receiveallofthesedocuments(outlinedbelow),youshouldcontact
yourproviderandrequestthemdirectly.
n What are the PRSA documents?
Application Form:ToapplyforaPRSAwiththeprovider,youmust
complete,signandreturntheapplicationform.Youneedtoprovide
proofofageandyourPersonalPublicServiceNumber(PPSN)with
yourapplicationform.Youmustrequesttheapplicationformfrom
yourchosenPRSAprovider.
Contract:ThisoutlinestheTermsandConditionsofyourPRSA
contract.YoucanrequestaPRSAcontractfromaPRSAprovider.You
shouldreaditbeforeapplyingforaPRSAwiththatprovider.Youmay
needthisdocumentwhenapplyingforbenefits.
Cancellation Notice:IfyouwanttocancelyourPRSA,youmustsign
thisandreturnitwithyouroriginalPRSACertificatewithinthe30-day
cooling-offperiod.TheCancellationNoticeisusuallyenclosedwith
theStatementofReasonableProjection.
Preliminary Disclosure Certificate (PDC):Thisoutlinesthebenefitsona
sampleorpersonalisedbasisthatcanbereasonablyexpectedfromaPRSA
afteracertainperiod,basedonanumberofassumptions.Itoutlinesthe
PRSA’sinvestmentstrategy,charges,taxreliefarrangements,cooling-off
period,riskfactors,andexpectedbenefits.Youshouldreceivethisbefore
youapplyforaPRSA.(Itmayformpartofthecontract-seeAppendix 1).
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Statement of Reasonable Projection (SRP):Thisoutlinesthebenefits
thatcanbereasonablyexpectedforyoufromyourPRSAbasedoncertain
assumptions.Youshouldreceiveitwithinsevendaysafteryousigna
contractwithyourPRSAprovider,andonceayearafterthis.Ifyour
providerisincreasingitscharges(havinggivenyoutwomonths'notice
tothiseffect),youwillreceiveanupdatedStatementofReasonable
Projectionoutliningthesechargeswithinsevendaysofitsdecision.
Youmayalsoreceivesuchastatementonrequest.(SeeAppendix 2).
PRSA Certificate:Thisoutlinesthecontributionsyouhaveagreedto
payatthetimeofenteringthecontractandthecontributionmethod
youwilluse.YouwillreceiveitafteryouopenyourPRSA.Ifyouare
self-employed,youwillneedthisCertificatetoavailoftaxrelief.Ifyou
areanemployeeandyourcontributionsaretobedeductedfromyour
pay,youshouldgivethisCertificatetoyouremployerandkeepacopyfor
yourself.AllPRSAholderswillneedthisCertificatetogettheirbenefits.
Investment Report:Thisoutlinestheinvestmentperformanceonthe
underlyingfundsinyourPRSA.Youshouldreceivethiseverysixmonths.
Statement of Account:Thisoutlinesthecontributionspaidintoyour
PRSAbyyou(andyouremployer,whereapplicable),andthetransfervalue
ofyourPRSAatthedateofthestatement.Ifyouheldanotherpension
beforeyouopenedyourPRSAandtransferreditsbenefitsintoyourPRSA,
thestatementalsooutlinesthetotaltransfervalueasacontribution.You
shouldreceiveaStatementofAccounteverysixmonths.Thisdocument
mayberequiredbyyourlocalInspectorofTaxes.
Certificate of Comparison:YouneedthisCertificateifyouarea
memberofanoccupational pension schemeandaretransferring
yourbenefitsintoaPRSA.ThisCertificatecomparesthebenefitsthat
mayaccruefromthetransferringoccupational pension schemewith
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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thebenefitsthatmayaccruefromthePRSAcontract.Youshouldget
thisCertificatebeforetransferringyourmember’sentitlementfrom
anoccupational pension schemetoaPRSA.Youshouldalsoreceive
awrittenstatementoutliningreasonswhysuchatransferisinyour
bestinterests.TheremaybeachargeforprovidingthisCertificate.
ACertificateisnotrequiredwherethetransfervaluefromthe
occupational pension schemeisinrespectofadeferredmember
andthevalue:
n islessthan€10,000,or
n representsarefundofcontributions,orthevalueofaccrued
benefits,toamemberwhoseemploymentrelatedtothe
occupational pension schemeislessthan2yearsandwhohas
nopreservedbenefit,or
n istakenfromanoccupational pension schemethewinding-up
ofwhichhasbeennotifiedtothePensionsBoard.
Disclosure Declaration:WhereitisproposedtoenterintoaPRSA
contractthatreplacesanexistingPRSAcontractoraRetirement
AnnuityContract(RAC),aDeclarationmustbeprovidedtoyoubefore
theinitialStatementofReasonableProjection(SRP)isissued.The
Declarationsetsoutadditionalinformation,includingthefinancial
consequencesofthereplacementcontract.
Non-Standard PRSA Declaration:Thisdocumentisissuedbythe
FinancialRegulator.Youshouldreaditbeforeyoubuyanon-Standard
PRSA.Yourprovidershouldprovideyouwiththisdocumentbutitis
alsoavailabledirectlyfromtheFinancialRegulator(seePart 11).You
mustsignthisDeclarationifchoosingtoinvestinanon-Standard
PRSA.YoushouldalsokeepacopyoftheDeclaration.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
n Do I need to hold onto my PRSA documents?
Yes,youshouldretainallPRSAdocumentsforyourownrecordsand
asevidenceofcontributionsmade.Youwillneedcertaindocuments
toavailofyourPRSAbenefits(PRSACertificate,Contract).Ifyouare
self-employedorpayingcontributionsdirectlyintoyourPRSAyourself,
youwillneedcertaindocumentstoavailoftaxrelief(PRSACertificate,
StatementofAccount).
Youshouldalsoletasolicitor,friendorrelativeknowwhereyoukeep
yourPRSAdocumentsincaseyoudieorbecomeseriouslyill,beforeor
afteryoubegintoreceiveyourPRSAbenefits.
n What are my employer’s obligations in relation to PRSAs?
Since�� September �00�,allemployersarerequiredtoentera
contractwithaPRSAprovidersothataccesstoatleastoneStandard
PRSAisavailableforall“excludedemployees”.
Insummary,youarean “excludedemployee”if:
n youremployerdoesnotofferanoccupational pension scheme,or
n youareincludedinanoccupational pension schemefordeath-in-
servicebenefitsonly,or
n youarenoteligibletojointheoccupational pension schemein
yourcompanyorwillnotbecomeeligibletojointhescheme
withinsixmonthsfromthedateyoubeganworkthere,or
n youareincludedinanoccupational pension schemethatdoesnot
permitthepaymentofadditional voluntary contributionsbythe
members.
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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Ifyouareacontractor,self-employedorunemployed,youcan
approachaPRSAproviderdirectlytoorganisesigningaPRSAcontract
withthem.YoucanresearchthePRSAproductsavailablebyconsulting
thisguideandrequestingtherelevantbrochuresfromthevarious
PRSAproviders.Alternatively,youcouldseekindependentfinancial
advice.Alistofapprovedproductsandtheproviderswhosellthemis
availableonthePensionsBoardwebsite:(www.pensionsboard.ie).
n How does my employer provide access to a Standard PRSA?
ToprovideaccesstoaStandardPRSA,anemployermust:
n enterintoacontractwithaPRSAprovidertoprovideatleastone
StandardPRSAto “excludedemployees”(seedefinitionabove),
n notify“excludedemployees”oftheirrightstocontributetoa
StandardPRSA,
n provide“excludedemployees”withaccesstoatleastoneStandard
PRSA,
n allowPRSAprovidersorintermediariestohavereasonableaccess
to“excludedemployees”attheirworkplacesothatPRSAscanbe
arranged,
n allowreasonablepaidleaveofabsence,subjecttowork
requirements,to“excludedemployees”sotheycansetupa
StandardPRSA,
n takePRSAcontributionsfromyourwagesatyourrequestandforward
thesecontributionstoyourPRSAproviderwithin21daysofthe
endofthemonthinwhichdeductionsweremade.Youremployer
cannotchargeyoufordeductingcontributionsfromyourwages.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
n adviseyouinwriting(normallypayslip)atleastonceamonthof
yourtotalcontributionandyouremployer’s,ifany.
n Can I hold a separate Personal Pension and a PRSA at the same time?
Yes,butthecontributionstobothareaddedtogetherwhen
calculatingyourmaximumtaxrelief(whichisdependentonyourage).
n If I am a member of an Occupational Pension Scheme can I take out a PRSA?
Yes.AmemberofanemployersponsoredOPSmayalsotakeout
ataxrelievedPRSAforadditional voluntary contributions.
n Can I cancel my PRSA after signing a contract with a provider?
Afteryousignacontractwithaprovider,youhavea “cooling-off”
periodof30days,fromthedateyouaregiventheStatementof
ReasonableProtection,duringwhichyoucancancelyourPRSA.Ifyou
cancelwithinthe “cooling-off”period,younormallygetafullrefund
ofallcontributionsandtransferspaidtoyourPRSA(Theremaybea
chargewhereyourPRSAproviderisalifecompanyandwheresingle
contributionswereusedandalossincurredasaresultofmarket
volatilityduringthe “cooling-off”period).
n Can PRSA products be suspended or withdrawn?
Yes,thePensionsBoard,inconsultationwiththeRevenueCommissioners,
cansuspendorwithdrawaPRSAproductifaPRSAprovider:
n requestsso,
n hasstoppedtradingformorethan6months,
n hasfailedtomeetitsstatutoryobligations.
n What happens if my PRSA product is suspended or withdrawn?
YourPRSAprovidermustwritetoyouinformingyouthatitsproduct
isbeingsuspendedorwithdrawn.Wheretheproductiswithdrawn,
theprovidermustimmediatelyarrangetotransferyourPRSAassets
toanotherprovider.YouthereforewillcontinuetopayintoyourPRSA
asnormal,butthroughanotherprovider.ThePensionsBoardmust
publishanoticeofaproduct’swithdrawalinatleastonenational
newspaperwithin28daysofthewithdrawal.
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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�. Contributing to my PRSA
n Is there a minimum amount that I must contribute to my PRSA?
YourPRSAprovidercannotaskyoutocontributemorethan€300
ayear,€10perelectronicfundstransfer(includingdirectdebit),
or€50forothertypesofpayment.
n Is there a maximum amount that I can contribute to my PRSA?
YoucancontributeasmuchasyouwanttoyourPRSA,aslongas
youmeettheminimumcontributionlevelsassetoutintheliterature
ofeachprovider.However,theamountoftaxreliefyoucangeton
contributionsdependsonyourage.
n How much tax relief do I get on my contributions?
Theamountoftaxreliefyoucangetoncontributionsdependson
yourageasfollows:
Age Limit
Under30 15%
30–39 20%
40–49 25%
50–54 30%
55–59 35%
60orover 40%
Ifyouareasportspersonorprofessionalwhousuallyretiresearlier
thanthenorm(suchasanathleteorjockey),youcangettaxrelief
on30%ofyournet relevant earnings,regardlessofyourage.Reliefis
givenatyourmarginal(higher)taxrate.Thereisamaximumamount
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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ofearningsof€262,382for2007(indexedinlinewithanearnings
adjustmentfactorwhichisdecidedbytheMinisterofFinance
eachyear)inayearforwhichtaxreliefwillbegiven.Ifyoumake
contributionsbutdonotgettaxreliefonthembecauseyouexceeded
yourtaxrelieflimitsorarenotworking,youcanapplyfortaxrelief
onthesecontributionsinthefuture.
CertainpeoplecanalsogetPayRelatedSocialInsurance(PRSI)relief
onPRSAcontributions.
YoucangetmoreinformationonthetaxrulesrelatingtoPRSAsfrom
theRevenueCommissioners’A Guide to Personal Retirement Savings
Accounts (PRSAs).YoucanviewthisdocumentonRevenue’swebsite:
(www.revenue.ie).
n How regular must my contributions be?
IfyouarearrangingyourPRSAthroughanemployerscheme,your
paymentswillusuallybemadeonceamonth.Ifyouarepayinginto
yourPRSAdirectly,mostprovidersallowyoutopaymonthly,quarterly,
half-yearlyandyearlythoughsomeprovidersofPRSAsallowyou
topayweekly.Youcanalsomakeadditionaltop-upcontributions
toaPRSAatanytime.
n How flexible can my contributions be?
Youarefreetostop,startandincreaseyourcontributionsatany
time.Youarealsofreetodecreaseyourcontributionsatanytime,
aslongasyoumeettheminimumannualcontributionlevels,ifany,
setoutbyyourPRSAprovider.Youmustusuallygiveyourprovider
advancenoticeifyouarechangingyourcontributionlevels,restarting
orstoppingcontributions.Youcannotbechargedforchangingyour
contributionlevelsorstoppingandrestartingyourcontributions.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Youcanmakeadditionaltop-upcontributionstoaPRSAatanytime.
Mostprovidershavean“indexation”optionthatallowsyoutoincrease
yourregularcontributionsinlinewithinflationeachyear.
n How can I pay my contributions?
Theacceptablepaymentmethodforcontributionsisatthediscretion
ofyourPRSAprovider.Mostproviderscurrentlyacceptregular
contributionsbydirectdebit,whilelump-sumpaymentsortransfers
areacceptedbycheque.Ifyouareanemployee,youremployermay
arrangetodeductyourmonthlycontributionsfromyoursalary.
n What happens if I don’t pay my contributions?
Youcanstopyourcontributionsatanytimewithoutbeingcharged
orpenalisedfordoingso,butrememberthiswillreducethepension
benefitsyoumayexpectatretirement.
Ifyoudonotpaycontributionsfortwoyearsormoreandthevalueof
yourPRSAfundis€650orless,yourprovidercanterminateyourPRSA
andgiveyouarefundofthevalueofyouraccount.Yourprovidermust
giveyouthreemonths’writtennoticebeforeterminatingyourPRSA.
n Are there any rewards or bonuses if I pay my contributions?
Someprovidersapplybonusunitsorlowerchargesifyour
contributionsareoveracertainlevel,youconsistentlymeetyour
monthlycontributions,oryouretireatthedateinitiallyspecified
whenyousignedyourcontract.IfyouinvestpartorallofyourPRSAin
certainfunds,youmayalsoreceivebonusesonandafterretirement.
n What happens if I change jobs?
Ifyournewjoballowsyoutobecomeamemberofanoccupational
pension scheme,youcantransferyourPRSAbenefitsintoyour
occupational pension scheme.Alternatively,ifyournewjobis
notpensionableoryoubecomeself-employed,youcannormally
continuetocontributetoyourPRSA.
n Can my employer contribute to my PRSA?
Yes,youremployercancontributetoyourPRSAbutisnotobliged
todoso.
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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�. Investing my PRSA
n What happens to my contributions once they are put into my PRSA?
YourPRSAcontributionsareinvestedinarangeoffundsandthe
valueofyourPRSAcanincreaseordecrease,dependingonthe
performanceofthesefunds.
n In what types of asset will my PRSA invest?
MostPRSAswillinvestinpooled fundsthataremanagedbylife
assurancecompaniesorotherinvestmentmanagers.Apartfrom
temporary cash holdings,StandardPRSAscanonlyinvestinpooled
funds.Thereisusuallyagreaterchoiceoffundstoinvestinwith
non-StandardPRSAs.
n What is a Default Investment Strategy?
ADefault Investment Strategyisacollectionofinvestmentfunds
thatisexpectedtomeetyourretirementsavingsexpectations.The
Default Investment StrategyforeachindividualPRSAproductisbased
ongeneralgoodinvestmentpracticeinsavingforretirementand
approvedbytheprovider’sPRSA-appointedactuary.Althoughitis
notarisk-freeinvestment,itisdesignedtoreducethelevelofrisk
oftheinvestments.
n Who decides how I invest my PRSA?
AllPRSAsmusthaveaDefault Investment Strategy.Thisstrategyis
anautomaticinvestmentstrategytobeappliedunlessyouindicate
otherwiseinwritingwhenyouapplyforyourPRSA.Inaddition,your
providerwillgiveyouachoiceofinvestmentfundsoutsidetheDefault
Investment Strategywhichyoumaychoosetoinvestin.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
n Should anything influence the choice of investment funds for my PRSA?
You(andpossiblyyourinvestmentadvisor)shouldconsiderthe
numberofyearsyouhaveuntilretirementageandyourexpectation
forretirementincomewhendecidingyourinvestmentfunds.
Generally,asyouapproachretirement,investmentinhigher-risk
fundsshoulddecrease.
n Can I change or switch between investment funds after I sign the contract with my PRSA provider?
Yes,youcantransferbetweenfundsormovefuturecontributionsinto
adifferentfund.However,someprovidersrequirethatyouholda
minimumamountofmoneybeforeyoucantransferbetweenfunds.
Also,someproviderslimitthenumberoftimesayearthatyoucan
switchbetweenorchangefundswithoutcharge.
n How do I know how well my investment fund is performing?
Everysixmonths,yourprovidermustsendyouanInvestmentReport
(seePart 3)thatoutlinestheperformanceofthefundsinyourPRSA.
n Should my PRSA investment fund meet any criteria?
YourPRSAinvestmentfundmustmeettherequirementsofthe
EuropeanCommunitiesDirectiveonUndertakingsforCollective
InvestmentinTransferableSecurities(UCITS),1985,asamended.These
regulationsaredesignedtoprotectinvestorinterestsbyrequiringa
spreadofinvestmentswithinanyonefund.(ThisDirectivewasfurther
amendedinFebruary2002toregulatemanagementcompanies,
simplifiedprospectuses,andtheinvestmentofUCITS.)
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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n What does the European Communities Directive on Undertakings for Collective Investment in Transferable Securities (UCITS), ���� do?
TheDirectivelaysdowncommonstandardsforanumberofinvestment
areasintheEU,includinginvestmentrestrictions(forexample,how
muchyoucaninvestincertainstocks),borrowingpowers,reporting
arrangements,prospectuses,andmarketing.
n What level of risk is associated with my PRSA?
Generally,itislikelythatmostofyourPRSAfundwillinvestinhigher-
riskfundsintheearly-to-midyearsofyourperiodtoretirement,
movingtomiddle-riskfundsinlateryears,andlower-riskfunds
asyounearretirement.Thisshouldallowyoutotakeadvantage
ofthegrowthofaggressivehigher-riskfundsandhavethesecurity
oflower-riskfundsasyounearretirement.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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�. Getting my PRSA Benefits
n When can I take my PRSA benefits?
Youcannormallytakeyourbenefitswhenagedbetween60and75.
Incertaincircumstances,youcantakeyourbenefitsbeforethen,such
asifyouretirefromemploymentatage50orover,orifyoucanno
longerworkbecauseofaseriousillnessordisability.
However,itisnotusuallypossibletocashinyourPRSAbeforeyou
reach60yearsofage(orretirement).Likewise,youcannotuseyour
PRSAassecurityforaloanorassignittosomeoneelse.
n What documentation do I need to get my PRSA benefits?
YouwillneedyourPRSACertificateandContract,yourbirthcertificate
andPersonalPublicServiceNumber(PPSN).Youmayalsoneedto
provideevidenceofhealthifyouareretiringearlierthannormal
formedicalreasons.
n Do I have to take all my PRSA benefits at retirement?
No,youcantakegradualbenefitsfromyourPRSAandcontinuetomake
PRSAcontributions.However,youmusttakeyourPRSAbenefitsatage
75andstopanycontributionsbeforethatage.Thereisacondition
forthisoption.YoucangetmoreinformationfromtheRevenue
Commissioner’sA Guide to Personal Retirement Savings Accounts
(PRSAs)whichisavailableontheRevenue’swebsite(www.revenue.ie).
n What will my PRSA benefits consist of?
YourPRSAbenefitswillconsistofthetotalcontributionspaidby
yourselfandyouremployer,whereapplicable,theinvestmentearned
onthosecontributions,lesscharges(Youremployercancontributeto
yourPRSA,butisnotobligedtodoso).
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
n Am I taxed on the investment return earned on my PRSA?
No,youarenottaxedforcapitalgainsontheinvestmentreturnyou
getonyourPRSA.
n What options do I have at retirement?
Youcanalsotakeatax-freecashlumpsumatretirementof25%
ofyourPRSAfund’svaluesubjecttoamaximum,and
n usethebalancetobuyanannuity,or
n leavethefundsinyourPRSAandwithdrawfromthem
atanytime,or
n transferthebalancetoanApprovedRetirementFund(ARF).
Thereareconditionsforeachoftheaboveoptions.Youcangetmore
informationfromtheRevenueCommissioners’A Guide to Personal
Retirement Savings Accounts (PRSAs)whichisavailableonRevenue’s
website(www.revenue.ie).
n What happens if I die before taking my PRSA benefits?
Ifyoudiebeforetakingyourbenefits,yourPRSAfundwillbe
transferredtoyourestate.Thefundwillbefreeofincometax,but
couldbesubjecttoinheritancetaxinthehandsoftherecipient.
n What happens if I die after I start to take my PRSA benefits?
Thisdependsonthepensionoptionyouchooseatretirement.
YoucangetmoreinformationonPRSAbenefitsfromtheRevenue
Commissioners’A Guide to Personal Retirement Savings Accounts (PRSAs).
YoucanviewthisdocumentontheRevenue’swebsite(www.revenue.ie).
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
��
n Can I transfer my PRSA benefits to another pension arrangement if I change jobs?
AsaPRSAisessentiallyyourpersonalpensionplan,youcannormally
bringitfromjobtojob,andfromemploymenttoself-employment
orviceversa.YoucantransferyourPRSAbenefitstoanoccupational
pension schemeoranotherPRSAwithoutcharge.
n Can I transfer occupational pension scheme benefits to a PRSA?
Youcanonlytransferyouroccupational pension schemebenefits
toaPRSAifyouhavebeenamemberoftheschemefor15years
orless,andtheschemeisbeingwounduporyouarechangingjob.
Youcannottransferyouroccupational pension schemebenefitsto
aPRSAifyouhavebeenamemberoftheschemeformorethan
15years.However,thevalueofAdditional Voluntary Contributions
toanoccupational pension schememaybetransferredtoaPRSA,
andtheaboverestrictionsdonotapply.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
�. PRSA Charges
n What are the charges for Standard PRSAs?
ThechargesforStandardPRSAsarecappedandcannotbeincreased
abovetheupperlimitsthroughoutthelifetimeofyourPRSAcontract.
Themaximumchargesare:
n a5%chargeoneachcontributionyoupay,and
n a1%annualfundmanagementcharge,basedonyourfundvalue.
MostoftheprovidersofStandardPRSAslistedonpage7havea5%
contributionchargeand1%annualfundmanagementcharge.However,
thesechargesmaybereducedincertaincircumstances.ThePensions
Boardkeepsanup-to-datelistofthechargesonallPRSAproducts
(Standardandnon-Standard)onitswebsite(seewww.pensionsboard.ie).
n What are the charges for non-Standard PRSAs?
Chargesonnon-StandardPRSAsarenotcappedandvaryamong
providers.ThePensionsBoardkeepsanup-to-datelistofthecharges
onallPRSAproducts(Standardandnon-Standard)onitswebsite(see
www.pensionsboard.ie).
n Are there circumstances where charges can be reduced?
Someprovidersreduceyourcontributionchargeifyourcontributions
areoveracertainlevel,andthefundmanagementchargemayalso
bereducedifthevalueofyourfundexceedsacertainleveloryou
retireontheretirementdateinitiallyspecifiedinyourcontract.
n Can my PRSA provider change its charges?
Yes,yourPRSAprovidercanchangeitscharges.Theprovidermustgive
twomonthsnotificationofanyincreaseinchargesandalsoprovide
youwithanupdatedStatementofReasonableProjectionoutlining
thesechargeswithin7days.However,ifyouhaveaStandardPRSA,
chargesarecappedata5%contributionchargeand1%annualfund
managementcharge.
n What can I not be charged for?
Someoftheservicesyoucannotbechargedforinclude:
n settinguporclosingaPRSA,
n cancellingyourPRSAwithinthe“cooling-off”period(charge
mayapplyifyourproviderisalifecompanyandwheresingle
contributionswereused),
n transferringotherpensionbenefitstoyourPRSA(whereaCertificate
ofComparison[page9]isrequiredafeemaybecharged.),
n transferringyourPRSAtoanotherPRSAprovider,
n increasingyourcontributions,
n decreasingyourcontributions(however,thismaydependonthe
chargingstructureofyourPRSA),or
n starting,stoppingorrestartingcontributions.
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
��
�. Complaints
n What if I have a complaint about my PRSA?
Dependingonthetypeofcomplaintyouhave,thereareanumber
ofauthoritiesavailabletohelp.YoucancontactthePRSAprovider,
thePensionsBoard,theOfficeofThePensionsOmbudsman,the
FinancialServicesOmbudsman’sBureau,ortheFinancialRegulator.
n How do I know who to contact?
PRSA Provider:Ifyouhaveacomplaintaboutthemanagementof
yourPRSAyoushouldinitiallycontactthePRSAproviderandtryand
resolveitdirectlybetweenyou.
The Pensions Board:AstheRegulatorofallapprovedPRSAproducts,
ifyouareunsuccessfulorunabletoresolvetheissuewithyourPRSA
provideryoushouldcontactthePensionsBoardwhocanassistyou
furtherinresolvingthecomplaint.
The Pensions Ombudsman:ThePensionsOmbudsmanhaspowers
inrelationtoaPRSAtoinvestigateanddetermine:
n acomplaintmadebyoronbehalfofan“actualorpotential
beneficiary”ofaPRSAwhoallegesthatheorshehassustained
afinanciallossoccasionedbyanactofmaladministrationdone
byoronbehalfof“apersonresponsibleforthemanagement
ofaPRSA”,and
n anydisputeoffactorlawthatarisesinrelationtoanactdone
byoronbehalfofapersonresponsibleforthemanagement
ofaPRSA,andthatisreferredtothePensionsOmbudsman
byoronbehalfofanactualorpotentialbeneficiary.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
��
Financial Services Ombudsman’s Bureau:Ifyouhavefollowedthe
internalcomplaintsprocedureofyourfinancialserviceproviderand
youarestillnotsatisfied,theFinancialServicesOmbudsmanmay
investigateacomplaintabout:theprovisionofafinancialservice,
anoffertoprovideafinancialservice,orthefailuretoprovidea
particularfinancialservicethathasbeenrequested.
The Financial Regulator:TheFinancialRegulatorisresponsiblefor
theregulationofallfinancialservicesfirmsinIreland.TheFinancial
Regulator’sroleistoprotectconsumersandtohelppeoplemake
efficientandeffectiveuseofcomplaintprocedures,andtoassist
andinformconsumerswherenecessary.Boardissuesofconsumer
protectionshouldbereferredtotheFinancialRegulator.
If you are unsure of where to go, any of the above organisations will
point you in the right direction.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
�. Quick Tips on PRSAs
Bewaryofmis-selling.IfgettingaPRSAthroughabroker,
intermediaryorothersales-person,ensuretheyofferaStandardas
wellasanon-StandardPRSAorgiveyouclearreasonswhytheyare
proposinganon-StandardPRSA.(Thereisnocaponchargeswith
non-StandardPRSAs).Youshouldseekindependentfinancialadvice
ifgettingyourPRSAdirectly,ratherthanthroughanemployer.
Bewaryofsubstitutionselling.Ifyouareinlong-termemployment
andalreadyinanoccupational pension scheme,youmaynotneedto
takeoutaPRSAunlessyouremployeriswindinguptheschemeor
youarechangingemployment.(PRSAsareaimedprimarilyatpeople
whohavenotmadeanypensionprovision).Occupational pension
schemesmayoffermorebenefitsthanPRSAsasyouremployerusually
contributestoyourscheme.Youremployercancontributetoyour
PRSAbutisnotobligedtodoso.
IfyouarechoosingyourPRSAprovider,shoparoundforanyrewards
orbonusesthatyougetformakingcontributionsorretiringonthe
dateinitiallyspecifiedonyourcontract.
Ifoptingforanon-StandardPRSA,rememberthatchargesarenot
capped(unlikeStandardPRSAs).Youshouldaskyourproviderfora
listofthecostdifferencesbetweenthenon-StandardPRSAandthe
StandardPRSAproduct.Youshouldalsoensuretoreadandsignthe
FinancialRegulator’snon-StandardPRSADeclarationbeforebuyinga
non-StandardPRSA,andtokeepacopyofthisDeclaration(seePart 11).
Bewaryofpromisesofbetterreturnsonnon-StandardPRSAs.Past
performanceisneveraguaranteeoffuturereturnsanditisdifficult,
ifnotimpossible,topredicthowwellanindividualinvestmentfund
willperform.
Youarefreetostopyourcontributionsatanytimewithoutbeing
chargedorpenalisedfordoingso.However,ifyoudonotpay
contributionsfortwoyearsormoreandthevalueofyourPRSAfund
is€650orless,yourprovidercanterminateyourPRSAandgiveyou
arefundofthevalueofyouraccount.Yourprovidermustgiveyou
threemonths’writtennoticebeforeclosingyourPRSA.
Takenoteofthetypeofservicesyoucannotbechargedfor(seePart 7).
Ifyoufindyouarebeingincorrectlychargedforsomething,contact
yourproviderandiftheoutcomeisunsatisfactory,contactthePensions
Board,thePensionsOmbudsman,theFinancialServicesOmbudsman’s
Bureau,ortheFinancialRegulator,whicheverisappropriate(seePart 8).
FordetailedinformationontaxreliefandPRSAs,youshouldcontact
theRevenueCommissioners.
KeepallyourPRSAdocumentssafelyandletasolicitor,friendor
relativeknowwheretheyare.
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
�0
�0. Examples
Philomena McGovern, aged ��, is a freelance journalistwho
earns€35,000ayear.Becauseofthenatureofherjob,sheisnotin
pensionableemploymentandhasnotyetmadeanypensionprovision
forherself.PhilomenadecidestoapplyforaStandardPRSA.She
initiallypays15%ofhersalary(€5,250forthefirstyear)intoherPRSA
whichmeansshecanavailoffulltaxreliefforherage.AsPhilomena
willbepayingmonthly,hercontributionsworkoutatabout€437.50
amonthforthefirstyear.Shealsochoosestheindexationoption
sothathercontributionsautomaticallyincreaseby5%eachyear.
Bydoingso,shehopesthatinflationwillnotdecreasethevalue
ofherpensioncontributionsthatmuch.
Asafreelancejournalist,Philomenadoesnotalwayshaveasteady
income.However,withherPRSA,shecanstop,restart,andchange
hercontributionsatanytime.IfPhilomenadecidestoendfreelance
workandworkwithacompanyatanytime,shecantransferwhatever
PRSAbenefitsshehasintothatcompany’soccupational pension
scheme(ifavailable).Ifthecompanydoesnotprovideanoccupational
pension scheme,shecancontinuetocontributeasnormaltoherPRSA.
Stephen Smith, aged ��, is a self-employed IT consultantwhoearns
€110,000ayear.Stephendoesnothaveapensionyet.However,as
hehaspreviouslyinvestedalotofmoneyinthestockmarkets,he
wouldliketotakeoutapensionthatallowshimtoinvestinhigh-
riskfunds.(Stephenfeelsthereisgreaterpotentialforreturnonsuch
funds).Hethereforeoptsforanon-StandardPRSAasthisoffershim
agreaterchoiceoffundstoinvestin.HedoesnotchoosetheDefault
Investment Strategy.Instead,hegetsindependentfinancialadvice
andchoosesthefundshewouldliketoinvestinhimself.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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Beforegettingthenon-StandardPRSA,Stephenaskshisproviderfor
alistofcostdifferencesbetweenitandtheStandardPRSAproduct.
HealsoensurestoreadandsigntheNon-StandardPRSADeclaration,
issuedbytheFinancialRegulator.
AlthoughStephencanonlygettaxreliefon20%ofhisearnings,he
contributes25%ofhisearningstohisPRSA(hehasnotpreviously
madeanypensionprovisionforhimselfandwantstomakeupfor
losttime).Heinvestshiscontributionsinanumberofhigh-riskfunds
butintendstochangetolow-riskfundsaboutfiveyearsbeforehis
retirement.Hehopesthatbydoingso,hisPRSAfundswillenjoythe
growththathigher-riskfundshavethepotentialtodeliver,butknows
thathisfundswillbesecureinlower-riskfundsashenearsretirement.
Aisling O’Toole, aged �0, is a casual chefwhoearnsabout€15,500
ayear.Shehasworkedwithanumberofcateringcompaniesona
part-timebasissincetheageof18,butsofar,nonehasofferedher
apensionarrangementbecauseofhercasualstatus.
AislingdecidestotakeoutaStandardPRSA.However,asshehas
neverinvestedinthestockmarkets,shehasnoinvestmentexpertise.
Therefore,shechoosestoinvestherPRSAintheDefault Investment
Strategy.Aislingpays€100amonthintoherPRSA,andchoosesthe
indexationoption.HerPRSAproviderestimatesthatafter35years,
thiscontributionlevelwillgiveAislingaretirementincomeofabout
€263amonth(intoday’sprices)fromtheageof65.As€263amonth
willbeworthalotlessin35yearsthanitisnow,Aislingintendsto
increasehercontributionssignificantlyfromtheageof35.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
��. Useful Contacts
Inthisbooklet,wehavetriedtocoverasmuchinformationonPRSAs
aspossible.Ifyourequirefurtherin-depthinformation,belowisalist
ofusefulcontacts:
Ark Life Assurance Company Ltd.,
OneParkPlace,HatchStreet,Dublin2
Tel:(01)8987500
Email:[email protected]
Website:www.arklife.ie
Canada Life Assurance (Ireland) Ltd.,
MapleHouse,TempleRoad,Blackrock,CoDublin.
Tel:(01)2102001
Fax:(01)2102020
Email:[email protected]
Website:www.canadalife.ie
Custom House Capital Ltd.,
9MerrionSquare,Dublin2.
Tel:(01)6325180
Fax:(01)6788460
Email:[email protected]
Website:www.chcam.ieorwww.arf.ie
Eagle Star Life Assurance Company of Irl. Ltd.,
EagleStarHouse,FrascatiHouse,Blackrock,CoDublin.
Tel:(01)2831301
Fax:(01)2831578
Email:[email protected]
Website:www.eaglestarlife.ie
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
��
EBS Building Society,
2BurlingtonRoad,Dublin4.
Tel:(01)6658027
Fax:(01)6659050
Email:[email protected]
Website:www.ebs.ie
Friends First Life Assurance Company Ltd.,
FriendsFirstHouse,
CherrywoodBusinessPark,Loughlinstown,
Dublin18
Tel:(01)6610600
Fax:(01)6616651
Email:[email protected]
Website:www.friendsfirst.ie
Hibernian Life and Pensions Ltd.,
OneParkPlace,HatchStreet,Dublin2
Tel:(01)8987000
Email:[email protected]
Website:www.hibernian.ie
Irish Life Assurance plc.,
IrishLifeCentre,LowerAbbeyStreet,Dublin1.
Tel:(01)7041250
Fax:(01)7041900
Email:[email protected]
Website:www.irishlife.ieorwww.myprsa.ie
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
New Ireland Assurance Company plc., (Bank of Ireland Life),
11-12DawsonStreet,Dublin2.
Tel:(01)6172000;(Tel:1850309309)
Fax:(01)6172800
Email:[email protected]
Website:www.newireland.ie
The Standard Life Assurance Company,
90St.Stephen’sGreen,Dublin2.
Tel:(01)6397587
Fax:(01)6397909
Email:[email protected]
Website:www.standardlife.ie
Other useful contacts
The Pensions Board,
VerschoyleHouse,28/30LowerMountStreet,Dublin2.
Tel:(01)6131900
Fax:(01)6318602
Website:www.pensionsboard.ie
Email:[email protected]
Office of the Pensions Ombudsman,
36UpperMountStreet,Dublin2.
Tel:(01)6471650
Fax:(01)6769577
Website:www.pensionsombudsman.ie
E-mail:[email protected]
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
��
Financial Regulator,
POBox9138,CollegeGreen,Dublin2.
LoCall:1890777777
Website:www.financialregulator.ie
E-mail:[email protected]
Financial Services (Pensions) Business
Office of the Revenue Commissioners,
GrattanHouse,4thFloor,LowerMountStreet,Dublin2.
Tel:(01)6474022
Website:www.revenue.ie
E-mail:[email protected]
Forinformationontaxationrelatingtopensions.
Consumers’ Association of Ireland,
44ChelmsfordRoad,Ranelagh,Dublin6.
Tel:(01)4978600
Website:www.thecai.ie
E-mail:[email protected]
Department of Social and Family Affairs,
PensionServicesOffice,CollegeRoad,Sligo.
LoCall:1890500000
Tel:(071)9169800
Website:www.welfare.ie
ForinformationonentitlementstoStatepensionbenefits.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
��. Glossary of Terms
Additional Voluntary Contributions (AVCs):voluntarypension
contributionsmadebyamemberofapensionschemeoverand
abovetheamountofcontributions(ifany)thatarerequiredunder
therulesofthescheme.
Annuity:guaranteedincomeforlifenormallypurchasedatretirement
inreturnforalumpsumpayment(totalcontributionsandinvestment
income).
Defined Benefit Scheme:wheretheamountofapensionbenefit
isspecifiedbyformulaeintherulesofthepensionscheme(usually,
yearsofserviceandpercentageofsalary).
Defined Contribution Scheme:wheretheamountofapensionbenefit
dependsontheaccumulatedvalueofcontributionspaidtoapension
schemeandtheinvestmentreturnsearnedonthosecontributions.
Default Investment Strategy:anautomaticinvestmentstrategythat
islinkedtogeneralgoodpracticeforinvestmentforretirementandis
certifiedbyaPRSAactuary.TheDefault Investment Strategyprovides
forinvestmentinpooled funds.
Net Relevant Earnings:broadlydefinedasearningsfromatradeor
professionalemployment,lesscertainallowableexpenses.
Occupational Pension Scheme:apensionschemesetupbyan
employertoprovideretirementand/orotherbenefitsforemployees.
Thistermisusedinterchangeablywith“companypensionscheme”.
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
��
PRSI:ashortenednameforPayRelatedSocialInsurance,underwhich
individualswhoearnanincomepayrelatedcontributionstothe
SocialInsuranceFundandinreturnarecoveredforcertainscheme
insurancebenefits,e.g.StatePension(Contributory).
Pooled Funds:acollectiveinvestmentschemewhereinvestors’moneyis
pooledtobuyaportfolioofassetsincludingGovernmentbonds,deposits,
property,andstocks.Thefund’sassetallocationistheproportionof
thefundinvestedineachdifferentassetcategoryoraninternallinked
fund,thebenefitofwhichismadeavailablebymeansofacontractof
insuranceofaninsurancecompanyauthorisedtooperateintheState.
Temporary cash holdings:short-termdepositswhichprovideasecure
income.
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Appendix � PRELIMINARY DISCLOSURE CERTIFICATE FOR A STANDARD PRSA
�. The certificate shall contain the following information:
(a) Benefits
Underthisheading,includeabriefdescriptionofthebenefits
providedbytheStandardPRSAandthemannerinwhichthose
benefitsmaybetakenbythecontributor.
(b) Investment Strategy
Underthisheading,describetheDefault Investment Strategyand
anyotherinvestmentstrategyapplicabletotheStandardPRSA.
(c) Tax
Underthisheadingincludeinformationinrelationtothetax
issuesrelevanttotheStandardPRSAincludingtaxreliefavailable
oncontributionsandtheextentofsuchtaxreliefs,thetax
treatmentofincomeandgainsearnedunderthePRSAcontract
andthetaxtreatmentofbenefitstakenfromthePRSA.
(d) Risk Factors
Underthisheading,giveabriefdescriptionofthefactorswhich
mayhaveanadverseeffectonperformanceorareotherwise
materialtothedecisiontoinvest,includinginvestmentrisks,the
restrictionontakingbenefitsearlyandtheconsequencesofnot
payingcontributions.
�. The Projected Level of Benefits
Subjecttoparagraph3,thecertificateshallcontainthefollowing
informationandtabledulycompletedinthefollowingform:
ThebenefitsthatwillemergefromyourStandardPRSAwilldepend,in
particular,onthelevelofyourcontributions,howlongyoupaythose
contributionsandtheinvestmentreturnachieved.
Thetablebelowillustratestheretirementincomeforlifepayable
monthlyfromage65projectedtobeobtainedfromcontributionsof
differentamountsstartingfromdifferentages.Thisretirementincome
hasbeenadjustedforinflationsothattheamountsareshownin
termsofcurrentprices.
TABLEOFBENEFIT
Amount of
contribution
paid per month
Retirement income payable for life from age 65
of contributions start from age:
20 30 40 50 60
€�0 €permonth €permonth €permonth €permonth €permonth
€�00 €permonth €permonth €permonth €permonth €permonth
€�00 €permonth €permonth €permonth €permonth €permonth
€�00 €permonth €permonth €permonth €permonth €permonth
This table shows that if contributions of €100 per month are made for
35 years from age 30 to 65, then the retirement income payable for life
from age 65 is projected to be € per month.
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
�0
IMPORTANT
THESE ILLUSTRATIONS ASSUME AN INVESTMENT RETURN BEFORE
RETIREMENT OF (RATE)% PER ANNUM AND INFLATION OF (RATE)%
PER ANNUM. THESE RATES ARE FOR ILLUSTRATION PURPOSES ONLY
AND ARE NOT GUARANTEED.
ACTUAL INVESTMENT GROWTH WILL DEPEND ON THE PERFORMANCE
OF THE UNDERLYING INVESTMENTS AND MAY BE MORE OR LESS
THAN ILLUSTRATED.”
�. [Theinformationinparagraph2isspecifiedforaStandardPRSA
andmaydifferforanon-StandardPRSA.]
�. Warnings
Thecertificateshallcontainthefollowingwarningnotices:
“WARNINGS
It is important to make adequate provision for your retirement.
At the date of this Certificate the State (Contributory) Pension
payable under the Social Welfare (Consolidation) Act �00� to a single
person who is qualified to receive the maximum rate amounts to
€___________ and equates to [___%] [ ] percentage of the latest
yearly figure for gross average earnings as published by the Central
Statistics Office for all industrial workers in all industries.
The value of your assets, and accordingly, the level of your benefits
will depend upon the value of the underlying investments of the
Standard PRSA and the income which they earn. These values are
not guaranteed, and may fall from time to time, as well as rise.
This Standard PRSA is intended to provide benefits over the
duration of your life from retirement and it should be viewed
as a long term investment.”
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
�. Information on Charges
(a) Inthissectionofthecertificate,thePRSAprovidershalldescribe
indetailthechargesleviedundertheStandardPRSAcontractand
includeinformationonhowthosechargeswilloperateandhow
theymaychangeovertime.
(b) Thecertificate,inthissection,shallalsostateasfollows:
“ThemaximumpermittedlevelofchargesonaStandardPRSA
suchasthisislimitedbylawto5%ofeachcontributionand1%
perannumoftheassetsintheAccount.”
�. Cooling-Off Period
Underthisheading,thecertificateshallcontain,inaprominent
position,thefollowingwords:
“Thiscontractisnotenforceableuntilaperiodof30dayshaselapsed
fromthedateonwhichyouaregivenaStatementofReasonable
Projectionandyoumaycancelthiscontractatanytimeduring
thatperiod.”
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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�. Certificate
ThePreliminaryDisclosureCertificateshallcontainthefollowing
wordsattheendofthecertificate:
“ThisPreliminaryDisclosureCertificatehasbeenpreparedunder
theprovisionsofsection111ofthePensionsAct,1990fordisclosure
inconnectionwiththisStandardPRSAonthe[date]:
Signed:______________________________________________
(Name of Director)
_____________________________________________________
(Name of Provider and address of registered office)
Date:_______________________________________________ "
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Appendix � STATEMENT OF REASONABLE PROJECTION FOR A PRSA
�. A Statement of Reasonable Projection shall contain the following information in the following form:
“(a)(i) NameofContributor:_____________________________
(ii) DateofBirth:___________________________________
(iii)Sex:___________________________________________
(b) NameofPRSA:_____________________________________
(c) NameofPRSAProvider:______________________________
(d) DateofsignatureofPRSAcontract: _____________________
(e) Projectedretirementdateofcontributor: ________________
(f) ValueofyourPRSAassetsasatdateofstatement: _________
(g) Thelevelofbenefitstobereasonablyexpected:
(i) ThevalueofyourPRSAassetsasshownaboveifnofurther
contributionsaremadecouldbeexpectedundercurrent
circumstancestoproduceanincomeforlifecommencing
atage[65]of[]permonthintermsofcurrentprices.
(ii) ThevalueofyourPRSAassetsasshownabove,togetherwith
futurecontributionswhichitisassumedyouwillpaywill
producethefollowingbenefit:
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
��
Year €
Total amountof contributions
paid in the future into the PRSA contract
up to the relevant date
€
Projected investment
growth to date
€
Projected PRSA contract value if no account
is taken of applicable
charges to date
€
Projected PRSA contract value if account is taken
of applicable charges to date
1
2
3
4
5
10
15
20
Maturity
Note:The projections shown above make no allowance for the effect
of inflation which will reduce the value of the projected benefits. The
projected maturity value of [€___] shown in the table is worth [€___]
in terms of CURRENT PRICES. This maturity value could purchase a
retirement income for the rest of your life starting from that date of
[€___] per month in terms of current prices.
IMPORTANT
THESE ILLUSTRATIONS ASSUME AN INVESTMENT RETURN BEFORE
RETIREMENT OF (RATE)% PER ANNUM AND INFLATION OF (RATE)%
PER ANNUM. THESE RATES ARE FOR ILLUSTRATION PURPOSES ONLY
AND ARE NOT GUARANTEED.
ACTUAL INVESTMENT GROWTH WILL DEPEND ON THE PERFORMANCE
OF THE UNDERLYING INVESTMENTS AND MAY BE MORE OR LESS
THAN ILLUSTRATED.”
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
��
�. Thetablesetoutatparagraph1(g)shallbeinannualstepsforthefirst
fiveyearsandeveryfiveyearssubsequently.Theyearofmaturityshall
beshowninaseparateline.
�. Information on Charges
Inthestatement,thePRSAprovidershalldescribeindetailthe
chargesleviedunderthePRSAcontractandincludeinformationon
howthosechargeswilloperateandhowtheymaychangeovertime.
�. Warnings
(a) Thestatementshallcontainthefollowingwarningnotices:
“WARNINGS
The value of your assets and accordingly, the level of your
benefits will depend upon the value of the underlying
investments of the PRSA and the income which they earn.
These values are not guaranteed, and may fall from time
to time, as well as rise.
It is important to make adequate provision for retirement.
This PRSA is intended to provide benefits over the duration
of your life from retirement and it should be viewed as a
long term investment.”
(b) ThestatementforaPRSAotherthanaStandardPRSAshallcontain
thefollowingadditionalwarningnotice:-
“It is recommended that you seek professional financial advice
about the nature of this PRSA contract.”
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Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
�. Social Welfare Pension
Thestatementshallcontainthefollowingparagraphcompleted
appropriately:
“At the date of this Statement the State (Contributory) Pension
payable under the Social Welfare (Consolidation) Act �00� to
a single person who is qualified to receive the maximum rate
amounts to €_________ and equates to [___%] [ ] percentage of the
latest yearly figure for gross average earnings as published by the
Central Statistics Office for all industrial workers in all industries.”
�. Certificate
TheStatementofReasonableProjectionshallcontainthefollowing
wordsattheendofthestatement:
“ThisStatementofReasonableProjectionhasbeenpreparedunder
theprovisionsofsections112and116ofthePensionsAct,1990on
the[date]:
Signed:______________________________________________
(Name of Director)
_____________________________________________________
(Name of Provider and address of registered office)
Date:_______________________________________________ ”
Personal Retirement Savings Accounts (PRSAs) – A Consumer Guide
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www.pensionsboard.ie