Q – I am married and worried, 42 years of age with two children and no pension. I was told employers have to provide a facility for employees to contribute into a pension, a PRSA. Can you advise me if they also have to pay into it as I don’t fancy as a family having to live on € 289.30 per week when I am at least 68 then ? Gerald – Cork
A – PRSAs – Personal Retirement Savings Accounts – were introduced Gerald in September 2003 forcing ALL employers to set up a debit system to allow employees to contribute to a pension plan if there was not one already in place. While they did NOT have to contribute to their employees’ pensions at least not yet – they will do now from next January 1st – moved from this September…called auto-enrolment – companies before this had to nominate an insurance company to allow pension payments or direct debits to be made by their employees. Failure to do so could have resulted in a fine to the employer of up to € 15,000 ! You should therefore approach your company and ask are they going to embrace auto-enrolment…starts with both employer and employee contributing 1.5% each per annum, the government 0.5% and going to 6% each and 2% from the government after 10 years totalling 14%…you need expert advice before committing to this structure.. email me for details.. You can of course also take the initiative yourself and open your own PRSA with any insurance company or pension financial adviser directly. The idea behind PRSAs was to make them affordable and portable for everyone. There is a maximum annual management charge of 1% together with a maximum agency charge of 5%. At your age you can invest up to 25% of your net monthly relevant earnings to maximise the tax relief available. It is without doubt the best investment in Ireland. Needless to say, there are a number of rules, regulations, terms and conditions and therefore you should seek professional, authorised and expert advice on same before setting one up.