SSIA tax break urged to boost pensions

The Government must offer tax incentives if it wants people to boost their private pensions savings using maturing Special Savings Incentive Accounts (SSIAs), financial services provider Standard Life has warned.

A survey of 1,000 people commissioned by the company found that only 6 per cent of SSIA holders plan to invest the proceeds of their account in a pension.

But when asked what they would do if the Government was to introduce an incentive such as waiving the exit tax if the money was reinvested in a pension, 53 per cent said they would invest part of all of their SSIA in a pension.

Brendan Barr, head of marketing at Standard Life in Ireland said the survey suggested there was a real opportunity for the Government to boost pensions savings.

"But this won't happen by itself. It is also significant that almost a quarter or 23 per cent of those with an SSIA have not yet made up their minds what to do with their SSIA money, suggesting that a pension incentive could be effective," he said.

Goodbody Stockbrokers has estimated that almost €15 billion will be released into the economy between May 2006 and April 2007 as the SSIAs mature.

Several financial institutions have called on the Government to encourage SSIA holders to reinvest their savings in pensions either by waiving the 23 per cent exit tax or widening the maximum percentage of a person's salary that can be invested in a pension scheme tax-free for the year of maturity.

Pensions that include SSIA-style bonuses instead of tax relief and pensions where part of the money is accessible after five years have been among the proposals to make pensions more popular.