Choosing between a PRSA and a company pension in Ireland has become one of the most important retirement planning decisions for business owners and company directors following the IORP II changes.  

A client came to us in early 2023 with a PRSA valued at approximately €1.4 million. A company director in his mid-sixties, he’d spent years building that fund through a combination of personal and employer contributions. His main concern wasn’t the pension itself — it was whether he had the right structure around it.

But there was a second question we needed to answer alongside the structure question — one that turned out to matter just as much. At that age, most financial advisers, and most pension providers by default, would have recommended de-risking his portfolio: moving him out of equities and into bonds and cash. “Safety” in inverted commas. Less than three years later, his fund is worth over €2 million.

Not because of any clever switching or market timing. Because he stayed invested in long-term, diversified equities — which is what we recommended. Had he accepted what passes for conventional wisdom at age 65 and de-risked into a conservative portfolio, he would have missed approximately €500,000 in growth over those three years. That’s not a return he failed to achieve. That is money he effectively would have lost — money he would have had but for that single decision.

We’ll come back to both decisions. But the immediate question he also had to answer — the one this post is primarily about — is the one more and more Irish business owners and company directors are now being forced to confront: is a PRSA actually the right structure for me, or would a company pension or Master Trust serve me better?

That question became considerably more urgent in 2026. April 22nd of this year marked the final deadline for executive pension schemes established before 2021 to transition under IORP II requirements. Thousands of business owners have had to choose between a PRSA and a Master Trust in the past twelve months. Many made that decision without fully understanding the differences. This post sets out those differences clearly — and returns to the investment question that our client’s story illustrates so powerfully.

What Is a PRSA in Ireland?

A Personal Retirement Savings Account (PRSA) is a contract between an individual and a pension provider — an insurance company or investment manager approved by the Pensions Authority. It is portable, individually owned, and relatively straightforward to set up. Unlike occupational pension schemes, it does not require an employer to act as sponsor or trustee.

Historically, PRSAs were limited primarily to personal contributions, with employer contributions creating a benefit-in-kind (BIK) tax charge. The Finance Act 2022 changed that significantly. From 1 January 2023, BIK was removed from employer contributions to PRSAs entirely. For two years — 2023 and 2024 — employer contributions were effectively unlimited. The Finance Act 2024 then capped them at 100% of the employee’s emoluments per tax year from January 2025, with any excess subject to BIK.

Employee contributions remain subject to age-related limits — 15% of net relevant earnings for those under 30, scaling to 40% for those aged 60 and over — applied to the earnings cap of €115,000. The Standard Fund Threshold (SFT) of €2 million applied until end of 2025; from January 2026, it rises to €2.2 million and will increase by €200,000 per year until it reaches €2.8 million in 2029.

Important: All pension figures in this post reflect rules and thresholds as at April 2026 and are subject to change. Always verify current Revenue guidance at revenue.ie, and take independent advice from a qualified advisor.

What Is a Company Pension or Master Trust in Ireland?

A company pension is an occupational pension scheme — a trust established by an employer for the benefit of employees. In recent years, the most common vehicle for this in Ireland has become the Master Trust: a multi-employer pension scheme with a professional trustee board that manages all governance and IORP II compliance requirements on behalf of participating employers.

Rather than each company establishing its own occupational scheme — which requires significant governance and legal overhead — the employer joins the Master Trust and has a ring-fenced section within it. The trustee board handles all IORP II compliance, investment oversight, and regulatory reporting.

Employer contributions to a Master Trust are based on both salary and service, which allows for more generous backdated funding than a PRSA in certain circumstances. The tax-free lump sum at retirement can be significantly higher than a PRSA allows. And unlike a PRSA, death-in-service benefits within a Master Trust are structured differently.

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PRSA vs Company Pension: Key Differences

The table below summarises the principal differences between the two structures. Individual circumstances vary, and the right answer depends on factors including age, salary, years of service, and existing pension accumulation.

The IORP II Context: Why This Decision Is Urgent in 2026

If you hold an executive pension established before 22 April 2021, you have just passed a significant regulatory deadline. IORP II — the EU Institutions for Occupational Retirement Provision Directive — was transposed into Irish law in April 2021. Ireland chose not to exempt small one-member executive pensions, meaning that all such schemes were required to transition to a compliant structure — either a Master Trust or a PRSA — by April 22, 2026.

The consequences of inaction are material. A scheme that did not transition by the deadline cannot accept new contributions, cannot be updated with new investment options, and may still carry ongoing governance costs. If you’re in this position, the transition can still be completed — but urgently, and with professional advice.

For those who did transition — or who are now establishing a pension for the first time — the PRSA versus Master Trust decision is the central one. The 2023 changes made PRSAs considerably more attractive for business owners. The 2025 cap on employer contributions narrowed that advantage somewhat. The right choice depends on your specific circumstances.

Who Should Choose a PRSA vs Company Pension?

PRSA tends to suit:

• Business owners or directors who want maximum flexibility and simplicity. The PRSA does not require trustee governance, legal documentation, or the administrative overhead of an occupational scheme.

• Those approaching retirement who want phased access — you can hold multiple PRSAs and access each at different times, rather than crystallising all benefits simultaneously.

• Individuals already with significant pension accumulation managing proximity to the Standard Fund Threshold. The PRSA’s 25% lump sum rule may produce a lower taxable event than a large occupational pension.

• Those whose primary concern is death benefit flexibility. The full PRSA fund passes to the estate with no cap.

Company Pension / Master Trust tends to suit:

• Business owners or directors who are starting their pension late and want to maximise funding based on salary and past service. The Master Trust’s funding formula can accommodate larger backdated contributions.

• Those targeting a larger tax-free lump sum at retirement. With 20 or more years of service, the 1.5× final salary calculation can significantly exceed the 25% of fund that a PRSA provides.

• Employers who want a fully governed, IORP II-compliant structure managed by professional trustees without internal overhead.

For some individuals, the answer is not one or the other. A combination — a company pension for occupational funding and a PRSA funded personally — can be a legitimate and tax-efficient structure, provided the total across all arrangements remains within the Standard Fund Threshold.

Investment Strategy Matters as Much as Pension Structure

Back to the client mentioned at the start — and the €500,000 question.

When someone arrives in their mid-sixties with a significant pension fund, a particular kind of advice tends to get offered. It goes by different names: de-risking, capital preservation, lifestyling. The idea is that as retirement approaches, you should reduce exposure to equities and move progressively into bonds, cash, and other lower-volatility assets. By age 65, many pension investors are automatically switched — through a mechanism built into their pension contract — into predominantly conservative holdings. The logic: protect what you’ve built.

It sounds prudent. It often isn’t.

We have written and spoken about this extensively on the Informed Decisions podcast and blog. The research on long-term investment outcomes is consistent: for investors with meaningful time horizons and the capacity to absorb short-term volatility, diversified global equities have outperformed conservative alternatives over any meaningful period. The problem is that most people in their mid-sixties still have 20 to 30 years of investment runway ahead of them. De-risking at 65 is not planning for retirement — it is planning for a retirement that ended in the 1990s.

One business owner I worked with: €1.4m PRSA in early 2023. Over €2m by early 2026. Estimated missed growth had he de-risked into a conservative portfolio: approximately €500,000. That €500,000 was not a gain he failed to make. It was money he would have had — and chose not to lose.

This framing matters. Research in behavioural economics consistently shows that people respond more strongly to losses than to equivalent gains — loss aversion. We feel the pain of losing €500,000 more acutely than the pleasure of gaining it. When we describe this not in terms of return achieved but in terms of loss avoided, the weight of the decision becomes clearer.

Had he accepted what would have been described to him as the “safe” option — de-risked, conservative, age-appropriate by conventional standards — he would have left €500,000 on the table. Not through bad luck. Through a decision made on the wrong assumptions about time horizon.

Getting the structure right matters — PRSA versus Master Trust determines contribution limits, lump sum entitlements, death benefit treatment, and regulatory exposure. But the structure question and the investment strategy question must be answered together. A perfectly structured pension invested in the wrong mandate is still a pension that is underperforming on its most important job.

Final Thoughts

The pension landscape in Ireland has shifted considerably in the past three years. The PRSA reforms of 2022 and 2023 created genuine optionality for business owners who previously had little reason to consider a PRSA at all. The 2025 cap on employer contributions reintroduced some complexity. And the IORP II transition has forced a decision that many had been deferring for years.

But the client story at the start illustrates two decisions, not one. First: the right structure for his situation. Second: staying invested in a mandate that reflected his actual time horizon rather than his age on a calendar. Both decisions mattered. The second may have mattered more.

If you are a business owner or company director and haven’t reviewed your pension structure — and your investment mandate — in the past twelve months, both reviews are overdue.

I hope this helps.

Paddy Delaney QFA RPA APA