Changes to Ireland’s Personal Retirement Savings Accounts

Employers in Ireland should be aware of significant changes to Personal Retirement Savings Accounts (PRSAs) that went into effect in January 2025. The changes are part of the Finance Bill published in October 2024 and will significantly impact retirement savings strategies for company directors and high-earning employees.

Employer contributions to PRSAs will be limited to 100% of the employee’s or director’s salary. For example, if an employee earns €50,000 in 2025, the employer can contribute up to €50,000 to their PRSA for that year. Any contributions exceeding 100% of salary will be treated as a Benefit in Kind (BIK). This means the excess amount will be subject to income tax and other applicable deductions. This new cap represents a major shift from the previous system, where there was no limit on employer contributions to PRSAs for company directors or employees.

Employers should also be aware that the auto-enrolment retirement savings scheme, called ‘My Future Fund,’ will commence on September 30, 2025. This scheme will require employers to make matching contributions for eligible employees who are automatically enrolled.

These changes necessitate a review and potential adjustment of existing pension contribution strategies for employers, especially those with high-earning employees or directors who previously benefited from uncapped PRSA contributions.

If you need support with your employee benefits in Ireland, please contact Asinta, and we will connect you with Howen Ireland.