There is very real danger that people will "squander" cash windfalls from maturing SSIAs on goods and services that will have "no long term benefit to the economy", according to Mr Diarmuid Kelly, Chief Executive of the Professional Insurance Brokers Association (PIBA).
Speaking after a meeting with the Pensions Board, Mr Kelly said there was an added danger that "it could also fuel further house price inflation". He called on the Minister for Finance, Mr McCreevy, "to start planning now for the maturing cash from SSIA investments to be used for long-term
investments, such as providing for people's pensions needs."
PIBA is proposing that Mr McCreevy would plan for the long-term product investment of the funds. "One area that the Government is keen to promote is pensions and PRSAs, to stave off the looming pension crisis in 25-30 years. We believe the SSIA maturing funds are ideal for this purpose,"
he says.
The PIBA made two proposals to the Pensions Board. It wants full tax relief to be claimed on the investment of maturing SSIAs into a PRSA in 2006/07 and wants the Government to continue the 25 per cent top up on SSIAs for persons who swap saving from an SSIA to a PRSA, for one year following maturity.
"This would mean that the cash built up from SSIAs could be invested for 20-30 years and the discipline implicit in saving over five years would be continued for people's long-term pension needs," Mr Kelly said.
He added that a special PRSA vehicle could be set up for maturing funds which directed investments into badly needed public infrastructure projects.
"This could be a win-win for everyone in the Irish economy and improve the long term economic prospects of the country, rather than causing a short lived consumer boom," he concluded.
