PRSA versus new auto-enrollment scheme?

jwof2006

Hi guys, Just wondering about the benefits of contributing to a PRSA versus the new auto-enrollment scheme that has been announced, for someone with no current pension cover? Thanks

y0ssar1an22

i've not yet found anything comprehensive on the new scheme. a few questions i would have:

you cant avail of it if you have a PRSA, but if you cancel your PRSA now can you avail when it comes into effect?

will there be tax relief on the new scheme?

will there be 200k tax free on the far side?

are the rates per the article linked below upper limits for contributions?

Year 1-3: employees will contribute 1.5pc of their salary, which will be matched by their employer, and the State will add an additional 0.5pc of the original amount put in by workers.

Year 4-6: 3% of salary for ER and EE + 1% by taxpayer

Year 7-9: 4.5% of salary for ER and EE + 1.5% by taxpayer

10+: 6% of salary for ER and EE + 2% by taxpayer

my advice would be wait and see till more detail comes out.

https://www.independent.ie/business/personal-finance/pensions/auto-enrolment-pension-scheme-finally-gets-government-green-light-hundreds-of-thousands-to-benefit-42053928.html

jwof2006

Thanks for this. Yeah, it's a tough one to know what to do. Am keen to start contributing and feel like another 2 years without any contributions/tax relief may be wasted time.

Jim2007

https://www.boards.ie/discussion/comment/119732492#Comment_119732492

Why would it be a waste of time? Are you not going to get the tax relief, will the investment not have the same opportunity to grow over time? Nobody knows what the future will hold all you can say is that you have decide pass on the current opportunity.

jwof2006

Yeah, fair point. I guess my concern was that you sign up for a PRSA now and then rule yourself out of the new more rewarding scheme perhaps.

The J Stands for Jay

https://www.boards.ie/discussion/comment/119736914#Comment_119736914

Unlikely that the new scheme will be more rewarding for anyone on the higher rate of tax.

Geuze

The AE scheme offers 25% tax relief, well below what a high rate tax payer can get, 40%, from any other pension scheme.