Question: I'm a 40-year-old woman working freelance in broadcasting and for the first time am seriously considering my options for starting a pension fund. As a self-employed person, I don't have the benefit of employer related contribution schemes. Is a PRSA my best bet, or are there better options on the market?
Answer: Starting a pension at any age is one of the most important things you can do for financial well-being, particularly as a self-employed person.
In terms of options available to you as a self-employed individual, a PRSA is a very popular choice. Personal Retirement Savings Accounts or PRSAs are generally easy-access, private pension savings accounts, which are designed to give people a flexible way to save for retirement, according to chief executive of the Irish Association of Pension Funds Jerry Moriarty. Regular contributions are made which are tax deductible within certain limits.
PRSAs are attractive because they are owned by the individual, and so are highly portable.
They also offer high flexibility and control of your money, in that you can increase, decrease or stop your contributions at any time without any charge or penalty. There are many insurers out there on the market offering a wide choice of funds and investment options.
There are two types of PRSA, a standard, and non-standard.
Standard PRSAs are the most common type and meet most people's requirements. The maximum charges permitted on these accounts by law is 5pc on contributions paid and 1pc a year on the PRSA fund value.
When your fund matures, you are entitled to a 25pc tax-free lump-sum from the accumulated fund. You might also consider a retirement annuity contract and should consider getting independent financial advice.
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