Six firms receive Pensions Board approval to sell PRSA products

The arrival of Personal Retirement Savings Accounts (PRSAs) on the market moved one step closer yesterday as the Pensions Board approved six companies to provide the low-charge, flexible pension products.

The board approved 41 PRSA products in conjunction with the Revenue Commissioners.

The six companies with approved products are AIB's life assurance company, Ark Life; Bank of Ireland's subsidiary, New Ireland; Irish Life; Hibernian Life & Pensions; Canada Life; and Eagle Star. The companies are expected to start selling PRSAs over the coming weeks.

Of the products approved, 16 are standard PRSAs, where charges are capped at 5 per cent on contributions and a 1 per cent annual management charge. The others are non-standard PRSAs, where there are no caps, although the two types of charges allowed must be transparent.

Ms Anne Maher, chief executive of the Pensions Board, said the approvals cleared the way for PRSAs to become available to the general public. She said the board was pleased that 40 per cent of the products were standard PRSAs.

Standard PRSAs are off-the-shelf pension products designed to be sold with little or no advice.

Ark Life is the only company to apply for just a standard PRSA. Ark Life finance director Mr Brian Woods has said he believes competitors will promote non-standard PRSAs more heavily than the standard version in order to secure a higher profit margin.

The Pensions Board said yesterday it did not think companies would have put the resources into applying for a standard PRSA if they were not prepared to commit to selling the product.

Eagle Star applied for the highest number of licences, receiving approval for three standard and 11 non-standard PRSAs, including one product that invests in a with-profits fund.

Mr Brendan Johnston, pensions and marketing director of Eagle Star, said the company needed so many licences because it intended to sell PRSAs through companies that want to promote PRSAs but not produce them. He said Eagle Star is negotiating with two financial institutions to provide PRSAs under their brand.

The six companies approved yesterday applied to become providers on November 11th, 2002, the day the Pensions Board first opened for PRSA business.

The Pensions Board will decide on a further four applications over the next few weeks. These are thought to be Friends First, Scottish Provident, EBS Building Society and investment intermediary Custom House Capital.

Another company applied for a licence yesterday, the Pensions Board confirmed, bringing the number of applicants to 11.

The Minister for Social and Family Affairs, Ms Coughlan, said PRSAs would be a "key instrument" in the Government's strategy to increase private pension coverage from 50 to 70 per cent of workers.

Employers will have to provide employees with access to a standard PRSA from the summer.