PRSA now the preferred Pension option for Directors and Business Owners
New pension changes in the Finance Act now allow for unlimited investment [ subject to the 2m pension threshold ] into a Personal Retirement Savings Account [PRSA] for business owners and Directors with the full amount allowable for tax relief within the accounting year.
The benefits for investing into a PRSA now outweigh investing into a Directors Pension plan.
The main advantages of PRSA’s over a Directors Pension are as follows.
- 1/ You are the policy holder unlike a Directors pension where it is set up under a Trust.
- 2/ PRSA already pre-approved by Revenue, Directors pension must be get Revenue Approval
- 3/ On death in service full value of the pension goes to the estate, with a Directors pension 4 times plus any AVC’s is paid out tax free to the estate and balance passed onto Spouse or dependants paid into an ARF or as an Annuity/pension for life.
- 4/ More flexibility to drawdown pension benefits at different stages from age 60 to age 75, Director pension benefits must be taken at the Normal Retirement age [NRA of the pension scheme.
- 5/ Can continue to invest into a PRSA up until age 75 if you are still working in your business and even if you have already taken benefits from a Directors pension. Retirement age for Directors pension is limited to between 60 and 70.
For more information please contact Colm Kelly
Cregan Kelly O’Brien Financial planning
T: 01 8700370