Prior to the recent changes made by the Government starting with the passing of the Finance Act 2022, the main structure considered by Company Directors to fund for their Retirement was an “Executive Pension Policy (EPP)” this was due to the level of contributions that could be made by their company on their behalf when compared to a “Personal Retirement Savings Account policy (PRSA)” along with the tax treatment of contributions into these respective policies.
Further changes made over consecutive budgets to the rules that govern contribution levels into PRSA’s have changed the pension landscape for Company Directors / Owners which we will explore in this article.
A PRSA is a pension structure that allows you and / or your employer to contribute into the policy to accumulate funds that can be used to provide you and your family with an income for the rest of your life after you retire.
The level of tax-efficient contribution that can be made by you and / or your employer is subject to upper limits and is determined by your annual earnings.
The PRSA is portable and transferable, allowing you to take it with you if you decide to move jobs or start a new business / career.
The funds in the plan are tax-neutral until retirement, which means that any accumulated growth is not taxed before retirement.
The PRSA is under the control of the employee at all times and is their asset.
An EPP is also a structure that allows both you and your employer to contribute into the policy for the employee’s future benefit. Any contributions made by the employer while Tax Free are subject to certain tax-efficient limits.
The EPP is under the stewardship of the appointed Trustee, and they work to ensure that the policy meets the ongoing Revenue and Legislative requirements at all times.
While the funds accumulated in an EPP can be transferable, any request to do so would have to be agreed with the appointed Trustees and maybe restricted due to the pension rules.
What have been the recent changes made over recent government budgets in relation to PRSA’s?
The main change that has occurred is how Company or Employer contributions are viewed. Prior to January 2023, any employer contribution was treated as a Benefit in Kind (BIK) for the employee and subject to deductions.
Also, any contribution made by a company or employer reduced the scope for the employees to make their own contributions, this restriction currently no longer applies.
What level of tax-efficient contribution can your employer now make into a PRSA?
Short answer up to 100% of your annual earnings from that employment.
When this is done there is no BIK for the employee and the company can receive corporation tax relief in the financial year that the contribution is made.
Comparing PRSA’s to EPP’s in 2025
| EPP | PRSA – 2025 |
Level of Contributions Allowed | Subject to Upper Limit Based on Salary & Service | Employer limited to the employee’s annual salary Employee – age-based limits apply |
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Tax Treatment for Employee | No Personal Liability | No Personal Liability once company contribution does not exceed employee’s annual salary level |
Tax Treatment for Employer | Allowable against Corporation Tax, subject to conditions | Allowable against Corporation Tax in the year paid subject to not exceeding employee’s annual salary level. |
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Access age | From Age 60 if continuing to Work. From Age 50 if left the employment connected to the pension | From Age 60 if continuing to Work. From Age 50 if no longer working and meeting requirements |
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Death Benefit | If Working – Up to 4 times final remuneration and personal contributions are Tax Free If left service fully tax free to estate | Fully tax free to estate at all times |
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Flexibility at retirement | All pensions from the same employment must be paid at the same time | Payments can be phased if multiple PRSA’s are in place |
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Lump Sum Options at Retirement (Subject to Lifetime limit) |
– Initial €200,000 is Tax Free -Next €300,000 taxed at 20% -Balance subject to Marginal Rate Income Tax, USC & PRSI | 25% of policy value can be taken as a lump sum. -Initial €200,000 Tax Free – Next €300,000 subject to 20% Tax. -Balance subject to Marginal Rate Income Tax, USC & PRSI. |
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Options with Balance of Funds |
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If you would like to explore and discuss the current rules and regulations could benefit you and your company before the forthcoming changes, come into effect, please email info@riordanfinancial.ie with any queries or call 063-30608 to talk.
*The information in the blog is based on our understanding on the relevant regulations as of November 2025 and will be subject to change in the future
