Call to model pensions on SSIAs

The pensions industry has called on the Government to introduce a bonus on pension contributions in the style of Special Savings Incentive Accounts to encourage greater pension take-up.

Responding to the Government's Green Paper on pensions, the Irish Association of Pension Funds (IAPF) yesterday said the current system of tax relief on pension contributions was not understood or valued by existing or potential pensions savers.

The largest seller of personal pensions, Irish Life, backed the call, saying an SSIA-style incentive was critical to tackling the pensions problem, while the Professional Insurance Brokers Association (Piba) said the sooner an SSIA-style pensions incentive was introduced the better.

Research by the IAPF indicates that 86 per cent of people without a pension in the services sector would start one if the Government were to contribute €1 for every €1 saved. The Pensions Board proposed last year that such an incentive should apply to personal retirement savings accounts (PRSAs).

Piba also said people should be given the option to withdraw part of their savings before the age of 45 for significant financial purchases such as a house.

Age Action said it was particularly concerned that adequate pension provision be made for the current generation of pensioners, for whom it might be too late to benefit from the reforms proposed in the Green Paper.

The organisation called for the basic State pension to be increased to 50 per cent of average earnings, up from its current 34 per cent, to protect about 90,000 pensioners at risk of poverty.

Reacting to a proposal to relax funding rules for defined-benefit occupational schemes, the Society of Actuaries said it believed the existing funding standard helped safeguard the entitlements of pension scheme members.

The IAPF also welcomed a recommendation in a report published yesterday on the annuities market that the option to invest in approved retirement funds, instead of being forced to buy expensive annuities on retirement, be extended to all members of defined-contribution schemes.