Choosing between a PRSA and a Master Trust depends largely on your career stage and goals. PRSAs offer flexibility and a straightforward estate benefit; Master Trusts come into their own when you want to fund for past service with a large, backdated contribution. Both are valid, tax-efficient ways for business owners and directors in Ireland to build a retirement fund — the right one depends on your age, your shareholding, and what you want to happen to the fund if you’re not there to see it.
Personal Retirement Savings Accounts (PRSAs)
A personal retirement contract held in your own name, with no trustees — the company contributes directly into a PRSA you own and control.
Pros
- Flexibility to phase retirement: you can hold more than one PRSA and draw down each at a different time, rather than crystallising the whole fund in one go.
- Full death benefit to your estate: if you die before drawing benefits, the entire fund value passes directly to your estate, with no trustee involved.
- Broader investment range: PRSAs sit outside the occupational scheme/IORP II investment rules, so some providers offer a wider range of assets than a typical Master Trust fund range.
- No trustees: the pension provider manages the contract directly, so there’s no trustee board or governance layer to deal with.
- No benefit-in-kind charge on employer contributions, in line with the rest of the standard rate.
Cons
- Employer contribution cap: since January 2025, employer PRSA contributions are capped at 100% of your salary for the year. Anything above that is treated as a benefit-in-kind and isn’t deductible for the company.
- No funding for past service: a PRSA can’t take your years of service into account the way an occupational scheme can, so there’s no way to “catch up” for years you weren’t contributing.
- Smaller tax-free lump sum: generally capped at 25% of the fund (subject to the same €200,000 lifetime cap), rather than the salary-and-service calculation available through an occupational scheme.
- No discretionary trust: because the fund passes directly to your estate, it doesn’t get the inheritance tax flexibility that a trustee-discretion payout can offer.
- Standard access age of 60, or 50 if you’ve retired from the employment the PRSA is linked to.
Master Trusts
An occupational pension scheme held under trust, with day-to-day governance run by a professional master trust provider rather than the company itself.
Pros
- Funds past service: contributions can be calculated using your salary and years of service, so if you’re in your 50s and have under-funded your pension to date, a Master Trust can support a much larger backdated contribution than a PRSA could.
- Larger potential tax-free lump sum: members with 20+ years’ service can generally take up to 1.5 times final salary tax-free (subject to the same overall €200,000 / €300,000 lifetime caps), versus the 25%-of-fund limit on a PRSA.
- Professional governance: a single trustee board takes on the regulatory compliance burden, including IORP II, on the employer’s behalf.
- Earlier access in some cases: if you give up your shareholding in the company, it’s sometimes possible to draw benefits from age 50.
- Suits a wider scheme: works well if you want to bring other staff into the same arrangement alongside the executive benefit.
Cons
- Capped death-in-service lump sum: typically limited to four times final salary plus a refund of contributions; anything beyond that has to provide an annuity or fund an Approved Retirement Fund for dependants rather than passing as a simple lump sum.
- Limited investment choice: confined to the fund range the master trust provider offers, and subject to IORP II investment rules.
- More complex funding calculation: maximum contributions factor in salary, service, and any retained benefits, which takes more work to assess than a straightforward PRSA contribution.
The Takeaway
If you’re earlier in your career, want simplicity, or want certainty over what happens to the fund on death, a PRSA is usually the better fit. If you’re in your 50s with capacity to make a large backdated contribution, or want the bigger tax-free lump sum an occupational scheme can offer, a Master Trust is likely to do more for you. Either way, the right structure depends on your age, your company’s profits, your shareholding, and your plans for the fund — worth talking through before you commit to one.
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