Pensions & Benefits

Retirement pensions are a vital ingredient in ensuring you have sufficient funds for when you no longer work.  There are three main types of pensions available in Ireland:

• Occupational Pensions: Many employers now have pension schemes in place which are available to employees.  Not only do occupational pensions provide a tax efficient way of saving for retirement, but you will also typically benefit from the contribution of your employer (depending on the type of pension – see below).  These generally work on a defined contribution ("DC") model, whereby the amount available at retirement is dependent on how much has been accrued.

• Personal Pensions: These include Personal Retirement Savings Accounts ("PRSA") (see further below) and Retirement Annuity Contracts ("RAC"), otherwise referred to as a private pension.

• Public Service Pensions: These are relevant for civil and public servants.

Occupational Pensions can either be contributory (whereby the employer and the employee make contributions), or non-contributory (whereby only the employee makes contributions).

Occupational Pensions also tend to be ‘funded schemes’, meaning that all contributions are placed into an investment fund from which benefits are paid.

In Ireland, there is currently no legal requirement for an employer to provide an occupational pension to workers.  However, if they do not, they must ensure that employees have access to a Personal Retirement Savings Account ("PRSA"). 

If employers provide an occupational pension, it may be either contributory (whereby the employer and the employee make contributions), or non-contributory (whereby only the employee makes contributions).

Personal Retirement Savings Account ("PRSAs") are a form of a tax-efficient savings account.  They are administered by a range of authorised providers and are open to anyone regardless of their employment status. Employees can hold both an occupational pension and PRSA concurrently. 

Employer Obligations

As an employer, you will typically deduct an employee’s PRSA payment from their salary and ensure these are paid to the provider.

In order to fulfil your obligations, you will need to:

•  Nominate a PRSA provider

• Communicate the chosen PRSA provider to your employees – with relevant details of the type of scheme selected

• Offer your employees (in writing) the option to opt into the PRSA and have their deductions taken from their pay automatically

• Check the PRSA is approved under the Act.

You will not have to pay any contribution to the PRSA (although there are tax advantages of doing so) and you will not be responsible for the choice of funds and its performance.

Yes, the Pensions Authority can issue ‘on the spot fines’ for failure to comply with the Pension Act; €2,000 for each offence.

As such, it is important to seek professional assistance with your occupational pension provision, and when providing access to a PRSA.

Our Employment Team can assist you with regard to any pension or PRSA matter.  If you are looking to implement a new scheme, or are facing a potential complaint or fine in terms of your current pension provision, we will seek to understand the issues at hand and provide you with the range of options to move forward with your best interests in mind.