What You Need to Know About PRSAs

History of PRSAs

In 2003, a report by the Irish Association of Pension Funds found that only 39% of workers were covered under an occupational pension scheme. 

PRSAs were introduced to the Irish market in the early 2000s to increase pension coverage across Ireland. 

Employers became obligated to provide at least one standard PRSA to all employees, and the pension market became more open to those who were lower-paid or self-employed. 

Over 20 years later, the landscape and regulations of pensions have evolved further. The article below will highlight the key areas of understanding and any recent reshaping of how a PRSA operates. 

Changes to PRSAs in 2025

It is important to note that the funding rules for PRSAs have changed following the Finance Bill in October 2024. 

Previously, employers could contribute unlimited amounts to an employee’s PRSA, regardless of income or years of service. 

A limit has now been placed on employer contribution to 100% of income drawn from the business in the same year. 

Eligibility & Access to PRSAs 

A PRSA is available to anyone regardless of their job, employment status or tax bands. 

We recommend enquiring about the pension scheme offered by your employer if you are a PAYE employee. 

The benefit of joining a workplace pension scheme, aside from the ease of administration, is that employers will generally match the employee’s contributions up to a certain percentage of salary, which means more goes into your pension pot. 

Opening a PRSA alongside your occupational pension to make Additional Voluntary Contributions (AVCs) is possible. 

However, it is important to query your workplace provider about this as they usually may have the facilities to allow AVC contributions to the same scheme. Pension planning can be challenging enough without creating multiple structures or schemes to manage. 

PRSA structures are often the most straightforward mechanism for starting a pension for business owners and company directors. There is no minimum amount you would have to contribute to start paying into a PRSA, and the structures are pretty transparent, more of which we will detail below.

Auto-enrolment is due to commence in September 2025 in Ireland.

Although the details are yet to be finalised, auto-enrolment will likely be the most straightforward pension planning option for many individuals. Auto-enrolment aims to help those who do not have access to a company pension scheme.

These include those just entering the workforce or returning after some time out of paid employment, those on lower incomes, or part-time workers.

You can read more about auto-enrolment here.

Types of PRSA

There are two types of PRSAs available – Standard and Non-Standard. 

The main difference is that for standard PRSAs, the charges are capped

The type of investments is also restricted for standard PRSAs, as you can only invest in pooled funds.

On the other hand, for a non-standard PRSA, there are no limits on charges. For this reason, it’s essential to work with a financial planner who is open and transparent about their fees. You can also access a wide range of asset classes to invest in.

Advantages & Drawbacks of PRSAs

When comparing a PRSA with a traditional pension structure, there are three advantages of a PRSA to note: 

• A PRSA can offer more flexibility. You can change contributions; your account is not tied to one employer. You can continue contributions if you move to a new job or become self-employed. 
• A PRSA can offer more choices. There are usually more investment fund options and providers, and they are not subject to certain legislation (IORPS II) as with other pension structures. 
• An employer doesn’t have to be a limited company. Sole traders and partnerships are also eligible to open a PRSA. 

Advantages	Drawbacks
Flexibility with contributions	Employers are not obligated to make contributions
Portability – the same structure can move with you to new employment	Access – you cannot access the funds before age 60
Tax – contributions are tax deductible at your marginal rate	Self-Managed – unlike occupational pensions, more responsibility lies with you
Transparency – visibility of fees and costs
Access – open to employees and self-employed

 

How to Contribute and Fund a PRSA

Contributions limits depend on two factors – salary and age. It’s important to be familiar with the income tax relief limits if you are looking to maximise your tax relief benefits.

The table below shows the various percentages of tax relief available for pension contributions in Ireland, based on your age.  

These percentage limits are based on the employee contributions. If your employer makes contributions, these are calculated separately, as noted above.  

The maximum earnings for calculating tax relief is €115,000 per year.

Age	Tax relief % of earnings limits
Under 30	15%
30-39	20%
40-49	25%
50-54	30%
55-59	35%
60 and over	40%

How do I start a PRSA?

Several providers in Ireland offer variations of PRSAs with different charging structures and investment fund options. 

Your financial adviser should compare your options and provide a comparative analysis of which works best for you. 

It’s also worth considering factors such as ease of doing business with the provider, whether they allow online access to your policy information, and the quality of their customer service.

Drawing Down Your PRSA in Retirement

When you retire, you can take up to 25% of your pension as a lump sum.  The first €200,000 lump sum is tax-free; the rest is taxed at 20%.  

The remaining three-quarters of your pension can be invested into an Approved Retirement Fund (ARF), or you may purchase an annuity. There is also the option to split the funds and do both. 

You can typically access your funds from age 60, with imputed distribution rules (meaning you must withdraw a certain amount) kicking in at age 75.  

Discussing your retirement options with your financial adviser well in advance is important to ensure you’re well on track and understand your options. 

Conclusion

Depending on your stage in life, a pension is something we don’t necessarily pay that much attention to. We either postpone planning for retirement altogether or set up a pension and forget about it, assuming everything is working away in the background fine. 

As with all pensions, including a PRSA, we recommend considering your retirement goals regularly and having at least an annual check in with your financial adviser.