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Contact us today and book your consultation https://www.quigley.ie/book-consultation and see how Quigley Financial Brokers can help you choose the best
options available or contact richard@quigley.ie for further information.
Personal Retirement Savings Account
Since January 2023, many company directors had switched their pension plan from
an Executive Pension to a Personal Retirement Savings Account (PRSA).
Changes in the Finance Act 2022 had meant that PRSAs now offered much
greater scope for their company to make an employer contribution into the
pension scheme on behalf of employees as employer contributions to a PRSA
were not subject to the same funding rules that existed within Executive
Pensions.
However, some of the pension funding that took place by Employers via PRSAs
did come under the scrutiny of the Revenue Commissioners who, in May of this
year, disclosed publicly in an Oireachtas finance committee meeting that they
had raised concerns with the Department of Finance. Our understanding is
that their concerns related to large contributions by employers to PRSAs for
persons connected with that employer which from the government’s perspective,
were not in keeping with the policy intent of the Finance Act 2022.
Changes to PRSA funding
In this year’s Finance Act, the government decided to change those PRSA
funding rules once again. The new funding regime will come into effect on the 1
January 2025. Up until that date an employer can still fund a PRSA for an
Employee (no limit on employer contributions) under the existing rules.
With effect from 1 January 2025 onwards, the maximum employer contribution
to a PRSA that will be tax relieved by an employer and will not trigger a benefit
in kind (BIK) for the employee will be “100% of employee salary” in the relevant
year. Existing regular premium PRSA arrangements with employer contributions
in excess of “100% of Employee Salary” will need to be reduced to avoid any
issues for clients.
Alternative Pension arrangements
This is a major change, and clients may wish to now seek an alternative pension
arrangement such as the Master Trust which may in some cases allow for more
generous ability to fund for that company director’s retirement. A funding
calculation will be needed to determine the scope for pension funding under the
Master Trust and a comparison can then take place.
So, why not talk to us when planning your retirement on the best options available.
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