PRSAs - or Personal Retirement Savings Accounts - are designed to be a cost-effective and transparent way for individuals to save for their retirement.
A PRSA is available to individuals regardless of their employment status and can be put in place by contract workers, part-time workers, self-employed and unemployed people. Legislation provides for two different types of PRSA – a standard PRSA and a non-standard PRSA. |
A PRSA is available to individuals regardless of their employment status and can be put in place by contract workers, part-time workers, self-employed and unemployed people. Legislation provides for two different types of PRSA – a standard PRSA and a non-standard PRSA.
Standard PRSAs
There are two charges applicable to a standard PRSA contract – a maximum of 5% of each contribution received and an annual fund management fee of 1% of the value of the funds.
Non-Standard PRSAs
There is no ceiling on the charging structure for a non-standard PRSA and it will usually be higher than on the standard product but they generally offer a wider range of fund choices than the standard product. It is important to seek professional advice as to what is the most suitable product to suit individual circumstances.
Employer Obligation
Employers who do not have a pension scheme in place are legally obliged to offer at least one standard PRSA product to their staff. They must inform their staff of its availability and allow them speak to an advisor on the matter. They are obliged to allow a payroll deduction facility for this but are not obliged to contribute themselves to the PRSA.
Employers who do not comply with the legislation - Pensions Amendment (Act) 2002 – face stiff penalties. |
