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All employers are required to have entered a contract with a PRSA provider so that access to at least one Standard PRSA is available for all “excluded employees”.
• Leave your benefit in the plan until you retire (known as a deferred or preserved benefit).
• Move or transfer the value of your pension benefits to another pension arrangement.
• Leave it in the current scheme, where it will continue to be invested, and then draw your benefits at retirement. You will need to contact the scheme trustees when you want to retire.
• Transfer it to another Occupational Pension Scheme if you are/become a member of another one.
• Transfer to a Personal Retirement Bond (“Buy Out Bond”) with a provider of your choice, You choose the provider and the fund and have control over the investment of the pension fund thereafter.
Your contributions to a company pension plan will normally be paid through payroll. As a result you will receive immediate and automatic tax relief together with relief from PRSI and the health levies. You do not have to claim this relief. The maximum contribution rate (as a percentage of total pay) on which you can receive tax relief is:
|Highest age at any time during the tax year||rate|
|60 and over||40%|
For tax relief purposes these contributions are limited to earnings up to a maximum of €115, 000 in any tax year.
Because AVCs qualify for tax relief at the highest rate of tax, you can actually reduce your income tax payments now, while you avail of a good opportunity. In addition any investment returns recorded are also tax free. In summary, you pay less tax now, and enhance your financial security for your retirement.
A contract between an individual and an authorised PRSA provider in the form of investment account. There are two types of PRSA – a standard PRSA and a non –Standard PRSA. For further information you can log onto the Pensions board website; www.pensionsboard.ie
With a defined benefit plan early retirement benefit re normally lower to allow for the additional cost of paying benefits early and for a longer period. With a defined contribution plan the fund available to provide your benefits would be lower on early retirement (as fewer contributions will have been paid and those paid would be invested for a shorter period). In addition, the cost of buying your pension would be more expensive.
The state pension age will be increased gradually to 68 years. In 2014 State Pension age will move from 65 to 66. It will then be increased to 67 in 2021 and 68 in 2028.