McCreevy heir ‘must encourage SSIA investors to put savings into pensions’
Friends First chief economist Jim Power said Finance Minister Charlie McCreevy’s heir must also make it far more attractive to low-earners to take out Personal Retirement Savings Accounts (PRSAs) to prevent workers hitting the breadline when they retire.
Mr Power says Mr McCreevy’s successor will have an unique opportunity to boost workers’ private pension cover by making it possible to divert SSIA savings into pension funds on a tax-free basis, over and above existing provisions.
“This is an unique opportunity which the new minister must grab and he has to make his intentions clear in the next Budget. He must also make it more attractive for low-paid workers to invest in pensions by making the effective tax relief on all pension contributions for all workers 42%. This would be a great benefit to those on the lower rate of tax,” he said.
Central Statistics Office figures indicate that pensions cover for all people in employment aged between 20 and 69 was 52.4%, up from just 51.2% in the first quarter of 2002.
Yesterday, Mr McCreevy announced the implementation of a number of further recommendations of the Commission on Public Service Pensions.
The main changes arising from the Government decision are as follows:
Introduction of cost-neutral early retirement to allow public servants to
retire (from 50/55, as appropriate) with actuarially reduced superannuation benefits.
The introduction of a new calculation formula for integration between social insurance and public service pensions to boost the aggregate retirement income of lower-paid public servants.
Teachers’ access to the revised Spouses’ & Children’s Scheme: An option to join the revised scheme (available for a fixed period) will be extended to all primary and secondary teachers serving at March 31, 2004.
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