Different Types of Pensions

 

 

Occupational/ Company pension schemes which are set-up by the employer and can be a
 
  • Defined benefit scheme – providing a defined level of pension benefit at retirement, usually based on your years of service and your earnings at retirement. Benefits can be affected if your pension scheme is not fully funded.
  • Defined contribution scheme – providing for your pension at retirement and the amount at retirement depends on the contributions made, return on the investment less fees and charges, where applied.
  • Hybrid scheme – is a pension scheme which is neither a full defined benefit nor a full defined contribution scheme, but has some characteristics of each.
     
Personal Retirement Savings Accounts (PRSAs) which are private pension plans set-up between the individual and an authorized PRSA provider. PRSAs are a type of defined contribution scheme, the value of which on retirement is determined by the level of contributions paid, the investment return achieved and the fees and charges. There are two types of PRSA –
 
  • Standard PRSA – the charges are capped on the contributions made, there are restrictions on the type of funds in which the contributions can be invested and there is no compulsion to purchase any other products when applying for a Standard PRSA. 
  • Non-Standard PRSA – there is no limit on charges and investments can be made in a range of funds.
     
Retirement Annuity Contracts (RACs) are private pension plans set up between the individual and an RAC provider. RACs are a type of defined contribution scheme, the value of which on retirement is determined by the level of contributions paid, the investment return achieved and the fees and charges.