Are Slow To Embrace Pension Plan
Quentin Fottrell, Dow Jones Newswires
average age of 35,
aimed at the 500,000 workers believed to have no private pension
. But banks and other pension
providers report that the policies have sold poorly. According to Friday's
figures, while nearly 51,782 employers have distributed information on
PRSAs to their staffs, only 6,707 employees had taken out one of the
accounts by the end of September.
government launched PRSAs in February with little fanfare to encourage
lower-income and self-employed workers to save for a rainy day. Charges
are capped, and contributions are flexible and tax-deductible. The
accounts are designed to be portable, allowing workers to take them from
company to company.
a problem: While employers are legally obliged to provide staffers with
information about PRSAs, they aren't obliged to make any contributions to
the accounts. And so, to pre-empt any employer apathy, the government told
employers in September that if they don't distribute PRSA information to
their staffs, they would risk fines of €12,700 ($14,600) or prison terms
of as much as two years.
employers signed up in droves -- but employees didn't.
a slow burner," said a Pensions
Board spokeswoman. "Unless you're in a company pension , people put pensions
on the long finger. If they don't start now, they could end up with a
state pension for €157
economists say Irish people are still living for today rather than
thinking about tomorrow. The Central Bank of
worse, PRSAs are specifically designed to encourage low-income and
self-employed workers to save for their golden years, but the pension
accounts are actually proving confusing and unappealing to these very
Morton, director at Moneywise financial planning, believes the application
process could be simplified. "There's also less incentive for workers
if their employers aren't obliged by law to make any contribution,"
is that there's no better option for low-income workers than PRSAs, which
are a good deal for pensionless workers, he said. Participants get tax
relief on contributions, which is 20% at
Life & Permanent PLC's Irish Life unit, which claims to have as
much as 40% of PRSAs, has criticized the government's marketing of the
accounts. It says it has put "a lot of money" into promotion and
talking to employers.
For its part, the government
set aside €500,000, the Pensions
Board said, for a "pensions
awareness campaign, which is the first of its type in
Despite what is seen as feeble
marketing, Irish Life pensions
marketing manager Tony Lawless said the group has sold more than 3,000
PRSAs. But he said the average premium has been €3,000 a year,
suggesting that PRSAs are appealing to medium- and higher-income workers.
Still, Pensions Board Chief Executive Anne Maher is upbeat on the uptake
for PRSAs thus far. "The figures represent a good start to a steady
PRSA uptake and increased pension
PRSAs aren't the only step the
Irish government has taken to avoid a pension
cash crunch. In 1999, it set up a National Pension Reserve Fund, gleaning 1% annually of gross domestic
product for the fund, which currently stands at more than €8.4 billion.
But with the latest PRSA
figures, economists say the government will have to rethink its strategy.
It should begin by forcing employers to make a PRSA contribution along
with the employees who sign up, they say.
John Cunningham, general
manager for group planning and marketing at Friends First, remains
concerned for the country's baby boomers. "
Meanwhile, Monica Seery, a