Employee pension scheme vs. Private scheme

Choosing the type of pension you want can be a challenge. With the huge number of options available to you, it’s important to know what’s best for you. Sometimes our employer sets up pensions for us, but is this always the best solution?

Today we are going to talk about the difference between having a work pension (occupational pension) or a personal pension.

What is a personal pension?

A personal pension is a retirement savings plan. Contributions can be made on a regular basis or as a one-time lump sum.

Personal pension plan:

This type of plan can be set up for you if you are a Sole Trader or an Employee. Indeed, it’s available to those with no access to an Executive Pension Plan or an Occupational Pension Scheme. It is not affiliated with any employer or company, and all contributions are made by you. Therefore, your employer cannot contribute to your pension.

You’ll be able to choose from a variety of providers, investment funds, and charging structures. If you are a sole trader, your contributions are taken from your sole trader bank account before the Income Tax deadline. Therefore, you will get tax relief on your contributions. You can learn more about tax relief here.

PRSA / Personal Retirement Saving Accounts:

A Personal Retirement Savings Plan (PRSA) is a form of investment account that you can use to save for retirement.

Indeed, If your employer does not offer an occupational scheme or if certain limits apply to their scheme, by law they must offer you access to at least one Standard PRSA.

You can choose to set it up by being the only contributor to your fund if you wish. You also have the option to add only your employer or both of you as contributors, if your employer agrees to contribute.

Additionally, the money paid into a PRSA is tax-deductible within certain limits. Unlike a personal pension plan, you don’t necessarily need to be earning an income and paying tax to take out a PRSA.

What is a work pension / occupational pension?

It’s important to know that there is no legal obligation for employers to provide occupational pension schemes for you. However, more and more employers are putting schemes in place.

This type of pension plan is set up by employers willing to contribute to their employees ’ pension fund. Here, your employer is the one choosing the provider and selecting the charging structure. Then you decide how much you want to invest and in what fund you want to invest your money.

Moreover, the Employer has to make a meaningful contribution on behalf of the employee i.e. a minimum of 10% of the employee’s contribution is considered to be “meaningful”.

For instance, if you contribute € 1,000 per month, your employer must add an additional € 100 per month into your fund. Plus, your personal contributions will be deducted from your gross wages before any Income Tax, USC & PRSI are calculated. Income Tax will be due from the net amount left.

Why should I consider a personal pension instead of a work pension?

One of the main differences between a private pension and an occupational pension is the investment options available. Indeed, when you invest in a work pension, you do not have the choice of the type of investment, the provider, or the charging structure. Whereas with a personal pension, you have the choice. Plus, a financial advisor can review your situation and find the solution that’s right for you. Therefore, you have more freedom and control over your money.

Moreover, in most cases, the contributions made to your occupational pension fund represent a percentage of your salary. Therefore, it can be quite complicated to increase or decrease the amount of money that you put in each month. If your employer allows it, there is still a maximum amount that you can’t reach. But, If you have a personal pension plan or PRSA you can easily increase the amount of money, or take out a new arrangement.

Another advantage of having a personal one and being the sole contributor is flexibility. Indeed, if you change jobs, there is a whole process and steps to be taken to either take a refund of your contributions, transfer your pension or leave your benefits where they are.

It can be challenging, especially if you are changing countries or if your pension scheme is closing. In this case, having a personal pension will make your life easier, because you can take it wherever you want since you are the only one to make contributions.


You are allowed to be a member of an occupational pension scheme and also set up a personal pension. However, it may not be possible to take advantage of the tax benefits of both plans. Plus, you can not contribute to both at the same time in relation to the same employment. However, you can make a personal pension arrangement with earnings from another employment or from self-employment.

How can we help?

As financial advisors, we can help you set up a pension or review your current one. You can book a free 15 min consultation with us here. A financial advisor will pick up the phone and listen to your queries.

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Greenway Financial Advisors Limited is regulated by the Central Bank of Ireland. Registered No. C168372

Debbie Cheevers

Debbie Cheevers

Qualified Financial Advisor

Debbie was born in Dublin and graduated from NCAD with a degree in Visual Communication. She brings a strong customer services background to Greenway.

Debbie qualified as APA in 2017 and a fully qualified financial advisor (QFA) in 2018.

She believes that product knowledge is key to helping customers make the right choices.