Securing your Future
Securing your Future
with
with
PRSA
PRSA
’
’
S
S
NUIG
NUIG
Noel Hackett (QFA,MIB,Dip in Investments)
Noel Hackett (QFA,MIB,Dip in Investments)
Consultant
Consultant –– Pensions ServicesPensions Services New Ireland Assurance
New Ireland Assurance
Contents
¾What is a PRSA
¾Tax Relief
¾PRSA Charges
¾Retirement Benefits
¾Investment Options
What is a PRSA?
¾
Personal Retirement Savings Account
¾
Pensions more accessible
¾
Investment vehicle for long term
retirement provision
¾
Individually held and owned
¾
Value for Money – Low Cost
Why take out a PRSA?
¾ Old Age Contributory Pension only €157.30
per week / €278.80 per week with Adult Dependant – Is That Enough???
¾ To replace earned income at retirement ¾ Maintain good standard of living
¾ Tax efficient – 3 types of tax incentives ¾ Remember!!! Your PRSA is in
Tax Benefits
¾
Tax Savings on contributions
¾
Tax Free Investment
Example
Net Cost of Investment 20% Tax 42% Tax
Employee contribution before tax 83.33 83.33
Less Tax Relief 16.67 35.00
Less PRSI relief @ 6% 5.00 5.00
Net Monthly Cost to Employee 61.66 43.33
Total Investment per month 83.33 83.33
¾Assuming gross annual salary €20,000/€1,666 p.m. ¾Employee contribution = 5% €83.33
PRSA Tax Relief
Age Maximum
Limits PRSA Tax Deductible*
Under 30 15%
30 to 39 20%
40 to 49 25%
50 plus 30%
* Percentage of your pay that you can contribute to your PRSA and obtain tax relief – limit applies to both
Charges : Standard PRSA
¾
Management Charge
1% of value of fund
¾
Contribution Charge
What happens if You Leave
¾
You can take your Investment with
The Sooner you Start, the Better
€153,389 €105,144 €69,353 0 50,000 100,000 150,000 200,000 Age 30 Age 34 Age 40What do I get at Retirement?
¾
25% of fund tax free
¾
Balance (taxable)
Cash in it
Invest and take income Buy an income
Investment
¾
Bank of Ireland Asset Managers
manage all New Ireland Funds
¾
Investment choice crucial to individual
employees
Investment Options
Default Option
¾ Individual Retirement Investment Service (IRIS)
Managed Funds
¾ Pension Managed Fund ¾ Pension Evergreen Fund
¾ Pension Security Managed Fund ¾ Consensus Fund.
¾ Aberdeen Asset Managers Management Fund ¾ KBCAM Pension Managed Fund
Investment Options
¾
Pension Cash
¾
Pension Gilt Fund
¾
Pension Equity Fund
Individual Retirement
Investment Service -
IRIS
Two Simple Rules
¾ The longer the term is to Retirement, the
higher the proportion invested in Equities
¾ As Retirement approaches, income is
secured by switching into Fixed Income Assets/Cash.
What is IRIS ?
¾ Individual Retirement Investment Service is New
Ireland’s unique lifestyle investment option
¾ It recognises that a single fund may not be able to
provide the right strategy for all employees
¾ Provides each employee with a fund tailored to
Example –
Progression of the IRIS Fund 2018
0% 25% 50% 75% 100% Currently In 2010 In 2014 In 2018
Equities Property Fixed Income Cash
IRIS in Action
Average Annual Growth to 31/08/03
1 Year 3 Years 5 Years
New Ireland IRIS
2002/03 6.16% 6.62% 8.32%
New Ireland IRIS 2018+ 0.83% -4.12% 5.83%
Average Managed Fund 2.0% -7.2% 2.7%
Investing in IRIS rather than a managed or consensus fund protected people retiring in 2003 from stock market volatility
Other Investment Funds
Asset Split –
31
stAugust 2003
International Equity Pension Equity Gilt Cash Consensus KBCAM Managed Aberdeen Managed Security Managed Evergreen Managed Cash Property Fixed Interest Equities
Pension Consensus Fund
¾ Passive approach to investment
Management
¾ Aims to track the average return of all active
Irish investment managers
¾ Follows “collective wisdom” of all managers
to determine asset allocation
¾ No active stock selection – “buys the index” ¾ Key advantage is elimination of manager
New Ireland Pensions Managed Fund Performance -v- Managed Average as of 31st August 2003
-2.4% 10.1% 6.0% 2.0% -7.2% 2.0% 8.7% 2.7% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00%
1 Year 3 Years 5 Years 10 Years
New Ireland Manager Average
Ranking 8 of 15 2 of 14 1 of 14 1 of 12
Can I keep track of my Fund
Performance?
¾
Statement of Account & an Investment
Report every 6 months
¾
Statement of Reasonable Projection
Conclusion
¾ State Pension is not enough.
¾ PRSA’s are good value for money
¾ PRSA’s are portable, individually held and
owned
