How PRSAs have changed in 2025
PRSAs have been receiving a lot attention in recent years particularly around changes in how they are funded. Last year, the 2024 Finance Act brought in more changes regarding PRSAs, which included a cap on employer contributions. If you own your own business and you are paying into a PRSA these changes may affect you and it is important to be aware of them!
As of 1st January 2025, employers can only contribute up to 100% of an Employees / Director’s gross salary into a PRSA. Note that any contributions over and above the Employee’s and Director’s salary….
- will not get tax relief.
- and will be treated as a Benefit in Kind (BIK) event for the Director and taxed accordingly.
For example, if an Employee / Director is earning a salary of €60,000 in 2025, the maximum amount that can be paid to a PRSA for this year is €60,000. Any amounts over and above their salary of €60,000 will trigger a BIK liability.
It is likely that the limit will be based on the salary received up to the point where the employer pays a contribution into the PRSA. As a Director you will need to be mindful of the following:
- Directors who are paying into a PRSA each month will need to review their regular contribution to ensure it is within the new limits. This means you may need to decrease your current premium.
- If paying a lump sum to a PRSA at year end, Directors will need to ensure that they remain within 100% of the salary received by the employee including any regular premiums paid.
The change in legislation means that PRSA funding limits align more closely with those of occupational scheme which have their own contribution cap, and means they still have a place within the broader pension system.
For some the revised PRSA funding limits may still be adequate. However, for others, transitioning to a Master Trust or another pension scheme might offer more favourable terms.
We suggest your review your pension arrangements to ensure they align with your retirement goals and the current regulatory framework. This is where Sunrise Financial Planning can help you. We will evaluate your options and support you to get the most from your pension funding.
Contact us now to find out more – gráinne@sunrisefinancialplanning.ie
