There are two types of PRSA – a Standard PRSA and a non-Standard PRSA. The main differences between them are the charges and investment options.
What is a Standard PRSA?
1. A Standard PRSA has maximum charges of 5% on the contributions paid and 1% a year on the managed funds
2. Apart from temporary cash holdings, these types of PRSAs can only be used to invest in pooled funds, also known as managed funds. These are typically internal linked funds of an insurance company or a collective investment scheme.
3. A Standard PRSA may not be marketed or sold if purchasing it is conditional on also buying some other product, such as life assurance.
What is a non-Standard PRSA?
A non-Standard PRSA does not have a maximum limit on charges and allows investments in funds other than pooled funds. This is the great feature of non-standard PRSAs - the PRSA holder can potentially invest in anything he/she wishes subject to the Revenue investment rules.
A key thing to take note of is that the SORP for a non-standard PRSA must contain the following warning notice:
“It is recommended that you seek professional financial advice about the nature of this PRSA contract”
Conclusion
Simple differences but notably the non-standard offers a lot more flexibility in terms of investment choice.
