Personal Retirement Savings Account (PRSA) Pensions

If you’re serious about your retirement savings, now might be the right time to consider contributing a percentage of your salary to a PRSA

One of the most lucrative ways of saving for retirement in Ireland is to open a Personal Retirement Savings Account (PRSA).

A PRSA is a special investment account which allows you to contribute a percentage of your salary towards an additional pension, and your contributions also qualify for income tax relief.

PRSA Ireland

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How do PRSAs work?

You allocate a portion of your salary each month to a PRSA, and this money is deducted from your gross pay. The contributions you make are invested by an approved PRSA provider, so the funds grow over time.

This essentially means you benefit twice – you’ll have more income when you retire, and you also pay less tax in the meantime.

Most people access these funds between the ages of 60 and 75, allowing for a higher standard of living in retirement than the state pension alone can provide. It can also supplement any additional occupational pension you may have.

Tax Benefits of PRSAs

So who should start a PRSA to boost their pension? For many people, these investment accounts are an attractive option as contributions qualify for income tax relief. The tax benefits of PRSAs include:

  • Reducing your income tax burden now

  • Savings grow tax-free

  • Taking a tax-free lump sum at 50

The Irish government offers these tax incentives to encourage people to take their retirement savings seriously by investing in pension products. 

However, the percentage of your salary that you can contribute to your pension savings account depends on your age, and is subject to an earnings threshold. 

What are PRSA maximum contributions?

The closer you get to retirement, the more you can contribute to your Personal Retirement Savings Account and receive income tax relief. Those aged 20 to 30 can contribute 15%, while those in their 60s who are approaching pension age can contribute up to 40%. This is known as your pension contribution threshold.

Age PRSA Contribution Limits
Under 30 years 15%
30-39 years 20%
40-49 years 25%
50-54 years  30%
55-59 years 35%
60 + years 40%

Earnings Threshold

The other key criterion that PRSAs are subject to is the earnings threshold. The maximum amount for which tax relief is provided in 2025 is €115,000.

FAQs

The state pension, at around €15,000 per year, is not enough for many people to maintain their standard of living in retirement. The Irish State Pension is 66% less than the average salary in Ireland.

There are 5 major PRSA providers: Aviva, Irish Life, Zurich, Standard Life and New Ireland. Each of the providers have their own PRSA funds, and you can review their pension fund performance here.

You can have a PRSA in addition to a contributory pension. Having a PRSA gives you security in retirement and increases your overall retirement pension pot. People who have a surplus of income often open a PRSA as an alternative to a savings account.

Auto-enrolment will come into effect on 1st January 2025, and will benefit over 700,000 workers in Ireland. Because employers and the State are required to make contributions on top of those made by employees under auto-enrolment, this could be a better option for those who wish to contribute a small percentage of their earnings.

The minimum allocation rate is 95%, meaning that if you contribute €100, at least €95 must enter your PRSA.

It is possible to cash out your PRSA (i.e. take a tax free lump sum) from as early as age 50 when the PRSA holder retires early. In most cases, PRSA holders can access their PRSA assets from the age of 60.

Only PRSA providers are required to pay annual fees. For one PRSA product, providers must also pay an initial €20,000 fee, and €5,000 for each additional product.

Ready to take the next step?.

Speak to a qualified financial advisor today to discuss your options regarding PRSAs, to reduce your tax burden and boost your retirement income.