James Lawless
Question:714. Deputy James Lawless asked the Minister for Social Protection if matters raised in correspondence (details supplied) will be examined; and if she will make a statement on the matter. [13117/24]
View answerWednesday, 20 March 2024
Questions (714)
Written answers
Standard Personal Retirement Savings Accounts (‘PRSAs’) have predetermined charging structures. In a standard PRSA, as per Section 104 of the Pensions Act, total charges are already capped in two ways - a 5% cap on each contribution and a maximum of 1% per year on the fund value. This charging structure reflects the fact that standard PRSAs may only invest in pooled funds (apart from temporary cash holdings for liquidity purposes) and that the pooled funds, while not limited to investment only in regulated assets, must meet certain criteria, including being appropriately diversified.
By contrast, the majority of non-standard PRSA contracts are not invested in a default investment strategy and, therefore, they are not subject to the limitations that apply to standard PRSAs as they can invest outside of pooled funds and investments do not need to be appropriately diversified. The investment choice available under a non-standard PRSA requires active management of the fund and the level of risk and charges associated can depend on the type of investment strategy chosen.
The PRSA provider is required to give two months' notice where they intend to increase charges. This facilitates contributors moving between providers and/or products, where they think they can get better value for money.
Under the Central Bank’s Consumer Protection Code, prior to providing a non-standard PRSA, the seller must complete a declaration confirming, among other things, that they have explained to the contributor that there are differences between standard and non-standard PRSAs, focusing on the fact that the charges may be higher and investment risks greater for a Non-Standard PRSA.
I trust this clarifies the matter for the Deputy.