Tax credits on pension contributions, pensions for children and incentives to convert Special Savings Incentive Accounts (SSIAs) into retirement savings are among the measures being considered as part of a new report into how to boost the number of people with a private pension.
The Pensions Board has commissioned a report from economic consultants Indecon to examine the incentives and deterrents to private pension coverage, which it is hoping to increase from 52.4 per cent of the workforce to 70 per cent.
Indecon is due to complete its report by the end of January. The Pensions Board will make any ensuing recommendations to the Department of Finance in time for any changes to be included in the Finance Bill.
Tax credits on contributions to occupational pension schemes and Personal Retirement Savings Accounts (PRSAs) could make saving for retirement more attractive to lower paid workers, the chief executive of the Pensions Board, Ms Anne Maher, said yesterday.
"The problem with pensions coverage is mainly focused in the lower paid area," she said.
People on low incomes do not benefit to the same extent as higher earners from the current system of tax relief on contributions, either because they only pay tax at the standard rate of 20 per cent and cannot get tax relief at the 42 per cent rate or because they are outside the tax net.
The report is also looking at a proposal by the Irish Insurance Federation (IIF) to introduce pensions for children to which, it is suggested, the Government would either deposit €10 a month until the child turns 18 or offer special tax incentives for donors such as parents or grandparents.
Proposals for how the Government could encourage SSIA holders to invest their maturing nest eggs into pensions include waiving the 23 per cent tax charge on the interest gains and enhancing the annual tax relief limits on pension contributions to allow savers to reinvest the SSIA fund tax efficiently.
The Pensions Board is due to deliver a separate report to the Government in 2006. This report is expected to examine the possibility of whether mandatory pensions will be required to reach the 70 per cent coverage target.
