Date set for PRSA applications

Companies that intend to provide personal retirement savings accounts (PRSAs) can apply to the Pensions Board from November 11th, the Minister for Social and Family Affairs, Ms Coughlan, has announced.

From that date the Pensions Board will accept applications from potential providers of the new flexible type of pension product, which aims to increase membership of pension schemes.

The board will have up to three months to decide whether to approve each application.

"The indications are positive that there is considerable interest being expressed in the PRSA business, which will be of benefit to the consumer," said Ms Coughlan.

It is expected that between 10 and 15 banks, life assurance companies and other investment firms will apply to become providers of PRSAs.

The easy-access personal pension plans were introduced under the Pensions (Amendment) Act 2002 and should be available to consumers in the first quarter of next year.

PRSAs are a way for people who do not have access to occupational pension schemes, including homemakers, carers and the self-employed, to make a long-term investment for their retirement.

PRSA holders will pay money into an investment account weekly, monthly or whenever they can, accumulating a portable pension fund that is not tied to any particular employer.

PRSA providers can set a minimum level that account-holders must contribute. The minimum cannot be greater than €300 a year, €10 per electronic transaction or €50 for any other method of payment. Employers may contribute to the PRSA, although they are not obliged to do so.

Employers who do not operate an occupational pension scheme or who limit membership eligibility to the scheme will be required to provide access to at least one standard PRSA and must notify employees of their right to contribute.

Employers must also give PRSA providers or intermediaries reasonable access to employees to discuss standard PRSA contracts and make payroll deductions at the employees' request.

The maximum that providers can charge on a standard PRSA is 5 per cent of contributions and an annual management charge of 1 per cent of the fund.

Customers are free to stop and start contributions at any time.