Pension Jargon Explained: A Plain-English Guide to Irish Pension Terms

Pensions matter to almost everyone, yet the language around them can make even a simple conversation feel complicated. Acronyms, technical terms and similar-sounding products don't exactly make things easier.

This guide explains some of the pension terms you're most likely to come across, in plain English. It won't tell you what you should do, because that depends on your own circumstances. But it should make your next conversation about pensions a lot easier to follow.

PRSA (Personal Retirement Savings Account)

A PRSA is a personal pension that you own in your own name. It's available to most people, whether you're employed, self-employed or moving between jobs.

Because the PRSA belongs to you rather than your employer, you can keep it if you change jobs.

Occupational pension scheme

An occupational pension, often called a company or workplace pension, is set up by an employer for its employees.

The employer will usually contribute to the scheme and, in many cases, the employee contributes too. Occupational pension schemes generally fall into one of two main categories: defined benefit or defined contribution.

Defined benefit (DB)

A defined benefit scheme provides a set level of pension income in retirement, usually based on factors such as your salary and how long you've worked for the employer.

Unlike a defined contribution pension, your eventual pension isn't simply based on the value of an individual investment pot. Defined benefit schemes are much less common in the private sector than they once were.

Defined contribution (DC)

With a defined contribution pension, money is paid into an individual pension fund for you.

The amount available when you retire depends on factors including how much has been contributed, how long the money has been invested and how those investments have performed.

Most modern workplace pensions in Ireland are defined contribution schemes.

AVC (Additional Voluntary Contribution)

AVCs are extra pension contributions you choose to make on top of your normal contributions to an occupational pension scheme.

They can be used to build up additional retirement savings, for example if you joined a pension scheme later in your career or simply want to increase the amount you're putting aside for retirement.

RAC (Retirement Annuity Contract)

A Retirement Annuity Contract, often called a personal pension, is an individual pension arrangement typically used by self-employed people or people whose employment isn't covered by an occupational pension scheme.

You make contributions to build up a retirement fund in your own name.

Tax relief on pension contributions

Contributions to an approved pension can generally qualify for income tax relief, subject to Revenue limits based on your age and earnings.

This tax treatment is one of the main differences between saving into a pension and putting money into an ordinary savings account.

Auto-enrolment (MyFutureFund)

MyFutureFund is Ireland's automatic enrolment retirement savings system, which began on 1 January 2026.

Employees are automatically enrolled if they are aged between 23 and 60, earn more than €20,000 a year and aren't already paying into a workplace or private pension through payroll.

Under the system, the employee, employer and State all contribute towards the employee's retirement savings.

If you're already contributing to a pension through payroll, you generally won't be automatically enrolled for that employment.

State Pension (Contributory)

The State Pension (Contributory) is a weekly payment from the State based on your PRSI contribution record.

It can currently be claimed from age 66, although the amount you receive depends on your contribution history and circumstances. People born on or after 1 January 1958 can also choose to access it between the ages of 66 and 70.

For many people, the State Pension forms one part of their retirement income, alongside any workplace or private pensions they've built up.

Retirement lump sum

Depending on the type of pension you have, you may be able to take some of your pension benefits as a lump sum when you retire.

How much you're entitled to take depends on the type of pension and the relevant Revenue rules. There is currently a lifetime tax-free limit of €200,000 on retirement lump sums, although your own entitlement may be lower.

What happens to the rest of your pension fund will depend on the arrangement you have and the retirement options available to you.

Annuity

An annuity is a product you can buy from an insurance company using some or all of your pension fund.

In return, the insurance company pays you a regular guaranteed income, usually for the rest of your life.

Once an annuity has been purchased, the decision generally can't be reversed, so the terms and level of income available are important considerations.

ARF (Approved Retirement Fund)

An ARF allows you to keep retirement funds invested after you retire rather than using all of the money to buy an annuity.

You can make withdrawals from the fund over time, while the remaining money stays invested. This means its value can rise or fall depending on investment performance.

ARFs are also subject to specific tax and withdrawal rules, including rules that can treat a minimum percentage of the fund as withdrawn for tax purposes.

You can read more about the different options available as part of retirement planning.

Standard Fund Threshold (SFT)

The Standard Fund Threshold is the limit on the total value of pension benefits a person can draw before an additional tax charge may arise.

For 2026, the Standard Fund Threshold is €2.2 million.

It's mainly relevant to people with larger pension benefits, but it's a useful term to recognise if it comes up during retirement planning.

Preserved benefits

If you leave an employer after completing at least two years' qualifying service in its occupational pension scheme, you're generally entitled to keep the pension benefits you've already built up.

These are known as preserved benefits. They can usually remain in the scheme until retirement, or you may have the option to transfer them to another pension arrangement.

Pension transfer

A pension transfer means moving pension benefits from one pension arrangement to another.

This often comes up when someone changes jobs and has pension benefits sitting in a former employer's scheme. Depending on the circumstances, those benefits may be left where they are or transferred to another suitable pension arrangement, such as a PRSA or Personal Retirement Bond.

A transfer isn't automatically the right option for everyone, so it's worth understanding what you may be giving up as well as what you could gain before making a decision.

Personal Retirement Bond (PRB)

A Personal Retirement Bond, sometimes referred to as a Buy Out Bond, is a pension policy held in your own name that can receive the value of pension benefits transferred from a former employer's pension scheme.

It allows you to hold and manage those pension savings separately after you've left that employment.

Where to from here?

Understanding the terminology is a good first step. Working out which of these terms actually applies to you, and how the different pieces fit together, is where getting some guidance can help.

If you'd like to talk through your pension or retirement plans, get in touch with the team at Provest in Douglas, Cork.