If you are leaving employment and you have a PRSA to which your employer was contributing, then it remains your PRSA after you leave that employment. This portability is one of the key advantages of a PRSA. In this section we discuss the options for your PRSA.
After leaving employment you must decide whether to continue to make contributions to your PRSA. This will usually depend on whether you continue to earn money from employment or from self-employment. One of the main reasons for contributing to a PRSA is to receive tax relief. In order to receive tax relief you need to have relevant earnings from employment or from a self-employed trade or profession. If you do not have relevant earnings in a given tax year, your contributions will not earn tax relief.
However if you are earning money from employment or from self-employment , then keeping up your PRSA contributions may be a good way to fund your retirement and to reduce your tax bill.
Please note that you should not continue contributing to your PRSA if you find employment with a new employer who provides you with access to an occupational pension scheme.
Transferring your PRSA to a new employer’s occupational pension scheme
It may be that you are commencing a new job with an employer who provides an occupational pension scheme. If you wish, and if the trustees of the new scheme will allow the transfer, you can transfer your PRSA into the occupational pension scheme.
However you are under no obligation to do this. If you wish you can leave your PRSA untouched, and take your retirement benefits from it separately or together with your occupational pension scheme benefits when the time comes.
The decision to transfer your PRSA into a new employer’s pension scheme requires some consideration. Charges for most pension schemes are lower than for most PRSAs. However, if the scheme you are transferring into is a defined benefit scheme, there may be a risk of insolvency and your money may be better left in the existing PRSA.
Transferring your PRSA to a new employer’s PRSA
If you commence work with a new employer who offers a PRSA, you have the option to transfer the value of your existing PRSA into the PRSA offered by your new employer. This is similar to the occupational pension scheme scenario. In theory you could continue contributing to both – however this may be unwise, as the salary and age related limits to pension contributions apply to all pensions that you may be contributing to at a given time.
Leaving your PRSA in place after ceasing contributions
If you leave your PRSA in place after ceasing contributions, it will remain invested in your chosen PRSA fund. The retirement benefits that you receive in the future will depend on such factors as the performance of that fund, the level of annuity rates when you retire and the age at which you retire.