QFA Pensions key terms

The earnings figure used by the Department of Social Protection to decide whether a person meets the income test for a contributory State pension. It is assessed against a yearly threshold and generally excludes certain income such as some public service payments.

The method of calculating the Irish contributory State pension that credits each year of paid contributions, credited contributions and home-caring periods, then averages them to give a weekly rate. It replaced the yearly-average system for new claimants from 2025.

Periods spent caring for a child under twelve or a dependent person, which can be credited towards the contributory State pension under the Total Contributions Approach, subject to a maximum of twenty years.

Social insurance credits awarded for periods when a person is not working but is in an approved situation, such as illness or caregiving. They count towards qualifying for a contributory State pension without requiring an actual PRSI payment.

A spouse, civil partner or cohabitant who is financially dependent on a State pension claimant and may receive an increase in the claimant's weekly pension payment, provided certain income and dependency conditions are met.

The pay-related social insurance based retirement pension paid by the State from pensionable age, with the rate depending on the claimant's contribution record and averaging method applied.

A retirement arrangement established by an employer, or group of employers, to provide benefits to employees. It may be funded through a trust or a contract and is governed by the Pensions Act.

An occupational scheme where the retirement benefit is calculated by a formula, typically based on salary and years of service, so the employer or scheme bears the investment risk of meeting the promised pension.

An occupational scheme where contributions are paid into an individual account and the retirement fund depends on the value of investments at retirement. The member, not the employer, carries the investment risk.

A person or corporate body that holds scheme assets and administers an occupational pension scheme in the interests of members and beneficiaries, with duties set out in trust law and the Pensions Act.

A written statement required from trustees of defined benefit schemes describing the principles governing investment decisions, including risk measurement and the relationship between assets and liabilities.

A periodic assessment by an actuary of whether a defined benefit scheme's assets are sufficient to meet its liabilities, used to set contribution rates and test compliance with funding requirements.

The statutory minimum funding test for defined benefit schemes, requiring assets to cover liabilities on a prescribed basis and, where a shortfall exists, a funding proposal to restore adequacy within an agreed period.

A plan submitted to the Pensions Authority by trustees of an underfunded defined benefit scheme setting out the steps and timescale to restore the scheme to the required funding standard.

The Irish statutory regulator for occupational pension schemes, trust retirement annuity contracts and PRSAs. It supervises compliance, registers schemes and can take enforcement action against trustees and providers.

A personal pension contract, known as a PRSA, open to almost anyone regardless of employment status, with standardised charges and disclosure rules and portability between jobs and providers.

A PRSA subject to statutory maximum charges and a restricted range of investment funds, which must be offered by every PRSA provider. It is designed to be simple and low cost for consumers.

An insurer or other authorised financial institution approved by the Pensions Authority to offer and administer PRSAs, including the obligation to offer a Standard PRSA.

A personal retirement fund into which the proceeds of a maturing pension or PRSA can be transferred at retirement, allowing the owner to keep the fund invested while drawing income and managing drawdown.

An approved retirement fund holding a required minimum amount of capital, commonly used where a retiree's guaranteed pension income falls below a threshold, so that a minimum level of assets is preserved.

A deemed annual withdrawal from an approved retirement fund or vested PRSA that is taxed as income even if the owner does not actually draw the money, applied at prescribed rates once the fund is above a threshold.

A contract with a life insurer that converts a pension fund into a guaranteed regular income for life, often with options for a spouse's pension or fixed increases.

The portion of a pension fund that can be taken as a once-off tax-free cash payment at retirement, subject to Revenue limits typically based on salary and years of service or a percentage of the fund.

The maximum total capital value of pension benefits a person may accumulate with favourable tax treatment, above which a charge applies on the excess when benefits are drawn.

The maximum contributions and benefits permitted for tax relief on pension arrangements, set by the Revenue Commissioners and varying with age, earnings and type of arrangement.

The mechanism by which pension contributions are deducted from income before tax or reclaimed at the marginal rate, subject to age-related percentage limits and an overall earnings cap.

A payroll method where employee pension contributions are deducted from gross pay before income tax is applied, giving immediate relief at the employee's marginal rate without a separate claim.

A court order made on divorce or judicial separation that allocates a share of one spouse's pension benefits to the other, without transferring the underlying scheme membership.

The amount a scheme or provider will pay to another arrangement if a member moves their accrued pension benefits, calculated on a basis set by the scheme actuary or provider terms.

A retirement annuity policy held under trust for the benefit of employees, commonly used by employers to provide pension benefits where no occupational scheme is in place.

The pay-related social insurance payment made by employees, employers and the self-employed which builds entitlement to contributory State benefits, including the contributory State pension.

The age at which a person becomes entitled to claim the State pension, which has been changing in Ireland and is distinct from any earlier retirement age set by an employer or scheme.

The age specified in a pension scheme's rules at which a member may retire with full benefits without actuarial reduction, which may differ from the State pensionable age.

A member's accrued pension entitlement retained in a scheme after they leave employment before retirement, which must be preserved until retirement age or transferred to another arrangement.

An extra contribution paid by a member into their occupational scheme, or a separate arrangement, to increase retirement benefits beyond those provided by the main scheme.

A PRSA that has reached its maturity date and from which the owner may take retirement benefits, including a tax-free lump sum and income through an approved retirement fund or annuity.

The duty on employers who do not operate an occupational scheme to provide access to a Standard PRSA for employees, including facilitating payroll deductions where requested.