Why PRSA's are still relevant

The introduction of imputed distributions announced in November’s budget caused some concern to fans of the PRSA. The Memorandum published by the Department of Finance immediately after the Minister’s Budget speech proclaimed that income tax should now be paid on 5%/6% of PRSAs post retirement but also that the tax should be calculated on the aggregate value of all of an individual’s PRSAs once benefits were taken from just one of them. 

The proposal led some advisors to state that the PRSA was no longer a useful vehicle to hold pension benefits. The clarification provided by Finance Bill 2012 that the imputed distribution would only apply to post retirement assets brought some relief.

However, for many reasons we still see the PRSA as a useful and flexible vehicle for pension planning, even after the introduction of the imputed distribution. Here are a few reasons why:

1. There is no imputed distribution where the PRSA investor has not drawn down benefits.
2. Income from UK property held in a PRSA, as opposed to an ARF, can be taken tax-free.
3. Where no benefits have been accessed, the fund goes to the PRSA holder’s estate tax-free. In the same circumstances, benefits of an occupational pension scheme have to be spent buying an annuity for dependants.
4. The PRSA allows you to consolidate personal pensions and frozen occupational benefits and facilitates the transfer of benefits from a personal pension to an occupational pension scheme.
5. The PRSA offers statutory protection against creditors, the ARF does not.
6. The PRSA allows you to split benefits which allow significant planning opportunities.
7. A PRSA investor who is also a 20% director and who wishes to retire before Normal Retirement Age is not compelled to sell his/her shareholding of the employer company.
8. A PRSA investor can continue to contribute until age 75, no matter whether benefits are taken or not.
9. The PRSA is the most carefully regulated pension product in the country, thus meeting the demands of the ever more attentive pension client.
10. The PRSA is still the only pension vehicle which allows all types of contributors; the employed, the unemployed, those without Schedule D or E income.

We will of course continue to keep you updated with developments in the Pension’s area as the finance bill runs through the houses of the Oireachtas.


More information on ITC's PRSA here.

Women taking 'huge financial risks' by relying on partners for support

Thursday 8th March marks International Women’s Day. This day has been observed since the early 1900s and since then we have witnessed a significant change and attitudinal shift in both women's and society's thoughts about women's equality. With more women in the boardroom, greater equality in legislative rights, and an increased critical mass of women's visibility as impressive role models in every aspect of life, one could think that women have gained true equality.

Why then has a new academic study found that a majority of females rely on their partners to pay for their retirement?

Less than one in three women who are entitled to a state contributory pension qualify for the full €230 a week payment, a study by academics from NUI Galway and Queen's University, Belfast, found. A majority of men, by contrast, end up with the full state pension when they retire.

Women have inferior pensions compared with men because they are mainly engaged in low-paying jobs or only work part-time and do not earn enough to qualify for a full state pension, with most of them not paying into a private retirement fund.

The fact that the primary role of many women is caring also accounts for poor pension provision among women.

The study, 'Older Women Workers' Access to Pensions', found that many depend on their partners' or husbands' incomes for a secure future, even though they may well outlive them as women tend to have longer life expectancies. This is a high-risk strategy because they could be left with nothing in the event of a separation, divorce, widowhood, illness or redundancy.

Women only tend to become aware of the importance of having a personal pension late in life when it becomes too expensive to fund for an adequate pension.

With an aging population and the Trioka having already signalled that state benefits to pensioners should be reduced, the notion of a state sponsored retirement is a high risk strategy. Supplementary pension coverage and contributions through private pensions must be increased to improve adequacy of incomes in retirement. 

They say life begins at retirement and for many women while it will be nice to get out of the rat race, without an adequate private pension they have to learn to get along with a lot less cheese. 

Emer Kirk

Independent Trustee Company



You saw them here first!

For those of you who attended our Knowledge Forum in November 2010, you will remember Niall Harbison of Simply Zesty who spoke to us on 'Building your Brand through Social Media'. It was announced today that Simply Zesty have been acquired by UTV for £1.7 million. We would like to wish Niall and his team the very best of luck for the future. You can read the full article here.

Simply Zesty co-founders Niall Harbison and Lauren Fischer

Our next Knowledge Forum is taking place on Wednesday 14th March at 8.00am in the form of a webinar. The webinar titled 'What the Advisor needs to Know' will cover a 'Pensions Update' by Aidan McLoughlin, Managing Director of Independent Trustee Company and a presentation on 'Adopting your Business in a Changing Market' by Executive Coach John Murphy of John Murphy International.

An application for 1.5 hours of CPD will be made.


There are still a limited number of spaces available, please click on the link below to register.