QFA Pensions flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Pillar I State pension

The State pension system includes the Contributory pension (based on PRSI contributions) and the Non-Contributory pension (means-tested). It is the first pillar of Irish pension provision.

PRSI contribution test

State Pension (Contributory) requires at least 520 full-rate paid PRSI contributions and either a yearly average of 10 or, under the Total Contributions Approach, 2,080 total contributions.

Total Contributions Approach

The TCA calculates the State Pension (Contributory) using total paid and credited contributions rather than the yearly average. It applies to claims from 2025 and credits home-caring periods.

State Pension age

The age at which the State Pension (Contributory) becomes payable is currently 66. The Commission on Pensions recommended increases, but no change has been legislated as of 2025.

Qualified Adult increase

An additional weekly payment for a dependent spouse or civil partner of a State pension recipient. The increase may be reduced if the dependent has income above the threshold.

Pensions Authority

The statutory regulator of occupational pension schemes, trust RACs and PRSAs in Ireland. It maintains the scheme register and can issue compliance directions and disqualify trustees.

IORP II

An EU directive transposed into Irish law in 2021 that imposes governance, risk-management, own-risk-assessment and member-disclosure requirements on occupational pension schemes.

Standard PRSA charges

Standard PRSAs are capped at a maximum of 5% of each contribution and 1% per annum of fund value. Non-standard PRSAs may charge more.

PRSA portability

A PRSA can be transferred between providers and continues across employment changes. Transfers are subject to Revenue rules and, in some cases, Pensions Authority approval.

Employer PRSA access duty

Employers must provide employees with access to a PRSA or occupational scheme and must facilitate payroll deductions if an employee chooses a PRSA.

Minimum Funding Standard

The statutory funding test for defined benefit schemes under the Pensions Act. A scheme failing the MFS must submit a funding proposal to the Pensions Authority.

Funding standard reserve

An additional buffer above the Minimum Funding Standard that DB schemes must hold. The Pensions Authority sets the reserve level and the compliance timetable.

Statement of Investment Policy

The SIPP sets out a DB scheme's investment objectives, risk appetite, asset allocation, liquidity and derivatives use. Trustees must review it regularly.

Own Risk Assessment

An IORP II requirement for trustees to assess all material risks facing the scheme, including governance and investment risks, and to review the assessment annually.

Tax-free retirement lump sum

Generally 25% of the fund value, subject to a lifetime cap of €500,000. Amounts above the cap are taxed at the individual's marginal rate.

Approved Retirement Fund

An ARF keeps the retirement fund invested and allows drawdown of income taxed at the marginal rate. An AMRF may be required until age 75.

Imputed distribution

A minimum annual withdrawal from an ARF or vested PRSA from age 61. The required percentage increases with age, for example 4% at 61-70 and 5% at 70+.

Annuity purchase

At retirement the fund is exchanged for a guaranteed income for life. The rate depends on age, health, interest rates and whether the annuity escalates or has survivor benefits.

Age-related contribution limits

Tax relief on contributions is limited to a percentage of net relevant earnings: 15% under 30, rising through 20%, 25%, 30% and 35% to 40% at age 60 and over.

Earnings cap

The earnings figure used for tax-relieved pension contributions is capped at €115,000. At the 40% limit the maximum relieved contribution is €46,000 per year.

Standard Fund Threshold

The lifetime limit on tax-relieved pension fund value is €2 million. Fund values above the SFT may be subject to a 40% charge on drawdown or on the excess.

Revenue approval Part 30

Pension schemes must be approved by Revenue under Part 30 of the Taxes Consolidation Act 1997 to qualify for tax relief on contributions and tax-free investment growth.

DB transfer value statement

Trustees must provide a member with a statement of the transfer value on request and warn about the risks of transferring out of a defined benefit scheme.

QROPS transfer

A transfer to an overseas pension scheme requires the receiving scheme to be recognised by Revenue. Otherwise the transfer may be a taxable event.

Consumer Protection Code

The Central Bank's rules require advisers to act in the client's best interests, disclose conflicts and charges, and provide a written suitability statement.

Financial Services Ombudsman

The FSPO handles complaints about pension providers, advisers and schemes. Complaints generally must first go through the provider's internal complaints process.

Defined benefit scheme

A scheme promising a pension based on salary and service. The employer bears investment and longevity risk, and the scheme is subject to the funding standard.

Defined contribution scheme

A scheme where the member's fund depends on contributions and investment returns. The member bears investment risk and the DB funding standard does not apply.

Actuarial funding certificate

A certificate provided by the scheme actuary at prescribed intervals confirming the DB scheme's funding position against the Minimum Funding Standard.

Personal pension RAC

A contract between an individual and a life assurance company. Contributions attract tax relief within Revenue limits and the fund grows free of tax.

Vested PRSA

A PRSA from which the member has taken retirement benefits. The fund can be used to purchase an annuity, invest in an ARF or take a taxable lump sum.

Credited contributions

PRSI credits awarded for periods of illness, unemployment, caring or education. They count toward the contribution tests for the State Pension (Contributory).