An update on PRSAs

Introducing the new name in self-directed pensions
February 2, 2023

Below you will find an important update on our AML requirements for PRSAs due to the recent changes to the Finance Act 2022 and we will also explore some of the opportunities these changes could present you and your clients.

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Changes to AML Requirements for PRSAs

Due to the changes in Finance Act 2022, we have begun to see an increase in employee and employer contributions to PRSAs. Due to this change in contribution type, our client risk assessment will increase to Medium Risk for all PRSA contributors.  As a result, we will now require TWO certified copies of a proof of address for all new PRSA applications. We have updated our marketing material to reflect this change, which can be found by clicking here. This change does not affect ARFs or PRBs.

As you are aware, a PRSA offers greater flexibility of funding, benefits, features, and investment choices. Changes to the Finance Act have made pension funding a lot more attractive and easier for company directors and key employees. Lets explore this in more detail below.

What does this mean?

From 1st January 2023, changes to the Finance Act

resulted in the removal of the BIK charge on all employer contributions to a PRSA. Essentially Employers are able to pay unlimited BIK free contributions to a PRSA for an employee or company

director. The contributions are not limited by salary, service, retained benefits, marital status etc.

It is important to note that an employer can only make a contribution to a PRSA for an employee (i.e. someone who is registered as an employee of the employer company and is receiving a salary under Schedule E with PAYE Taxation applied at source).

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PRSA advantages for Company Directors/Key Employees

Advantages
Change

Potential Opportunities

  • PRSAs are the one-member pension vehicle of choice
  • You can now wind up a SSAP and transfer to a PRSA with no restriction on funding
  • Employer company contributions to a PRSA are more attractive than to an occupational pension scheme given there are no funding limits
  • Where existing SSAPs assets do not ‘fit’ in to a PRSA they can be transferred to a PRB. The PRSA can then be used for future company contributions
  • PRSAs are not subject to IORP II rules
  • Opportunity for business owners and their families to tax efficiently extract more wealth from their companies

As you are aware, a PRSA offers greater flexibility of funding, benefits, features, and investment choices. Changes to the Finance Act have made pension funding a lot more attractive and easier for company directors and key employees. Lets explore this in more detail below.

Should you wish to discuss these opportunities in further detail, please contact your dedicated Business Development Manager. 

Please note that the provision of this product or service by Quest Retirement Solutions Ltd does not require licensing, authorisation or registration by the Central Bank and, as a result, it is not covered by the Central Bank’s requirements designed to protect consumers or by a statutory compensation scheme.