PENSIONS: If you don't already have some type of pension, it could be because you are "atypical". You haven't gone down the traditional route of staying with one employer full-time for years.

Maybe you've taken career breaks to look after your children or a family member. Maybe you've just moved around a bit in your career. You may not realise it but you are in the target group for PRSAs. There is a pension product out there homing in on you, so be prepared and get to know the ABCs of PRSAs.

What is a Personal Retirement Savings Account (PRSA)?

A PRSA is an investment vehicle to be used for long-term retirement provision by employees, self-employed, homemakers, carers, unemployed or any other category you can think of. It is a contract between an individual and the PRSA provider in the form of an investment account.

You pay money into the account weekly or monthly or whenever you can, decide on an investment strategy, and the idea is that you will accumulate a fund that will boost your retirement income. This portable investment product is not tied to any particular employer and should be available by the end of the year.

There are two types of PRSA - standard and non-standard.

How will the PRSA benefits/pay out be determined?

The PRSA benefits will be determined by the contributions paid by and on behalf of the contributor and the investment return on those contributions. The PRSA contributor is the beneficial owner of the underlying assets, which may not be used as a form of collateral.

What are the key features?

Each PRSA provider will be obliged to prepare a default investment strategy (DIS) for each product that complies with specified requirements. The DIS will be an automatic investment strategy to be applied unless the contributor indicates otherwise (in writing). The strategy will be linked to general good practice for investment for retirement and be certified by the PRSA actuary.

The DIS will provide for investment in pooled funds. Standard PRSAs will only be permitted to invest, apart from temporary cash holdings, in pooled funds - a collective investment scheme or an internal linked fund - the benefit of which is made available by means of a contract of insurance.

While no restrictions are laid down for investments held outside the DIS, regulations may be introduced in this regard.

What about charges?

You cannot be charged for transferring from one PRSA provider to another. Nor can you be charged for switching from other pension arrangements. You are also free to stop and start contributions at any time without incurring charges.

Is there a maximum level of charges?

The maximum that can be charged on a standard PRSA is 5 per cent of contributions and an annual charge of 1 per cent of the fund.

Charges for non-standard PRSAs may be discretionary and do not have a maximum level.

The PRSA provider must give at least two months notice of any changes to the charging structure.

Who may contribute to a PRSA?

Contributions may be made by individuals regardless of their employment status. Employers may contribute but are not obliged to do so.

Is there a minimum level of contributions?

Yes, PRSA providers cannot impose a minimum contribution greater than

(a) €300 per annum, and

(b) €10 per electronic transaction, or

(c) €50 per transaction for other methods of payment.

What does mandatory employer access involve?

An employer who is not operating an occupational pension scheme or whose scheme limits membership eligibility or imposes a waiting period will be obliged to provide access to at least one standard PRSA for employees.

What must an employer do to provide access to a standard PRSA?

To provide access to a standard PRSA, an employer must:

enter into a contract with at least one PRSA provider to enable employees to participate in a standard PRSA.

notify employees of their right to contribute to a standard PRSA.

allow PRSA providers or intermediaries reasonable access to employees (who would be entitled to reasonable paid leave) to discuss standard PRSA contracts.

n make deductions from payroll at the employees' request.

Information supplied by the Pensions Board