‘Too early’ to make PRSAs compulsory
Yesterday, Hibernian’s life and pensions manager Grant Barrans said the current rate of PRSA uptake is not sufficient to push the level of pension uptake above the 50% of workers who have some form of non-State funded pension cover.
Mr Barrans said the vast majority of these were State or semi-State employees, working with financial institutions or larger companies.
“The vast majority of ordinary workers do not have pension cover and some degree of compulsion is required. The current level of take-up is very, very low,” he said.
Hibernian’s marketing and product development director Ian Veitch said most people do not have access to quality financial advice and the degree of apathy towards, and ignorance of, PRSAs among the workers who could benefit most is very high.
“There is only way this is going to work; everyone must be required to contribute a percentage of their earnings towards their pension,” he said.
However, responding to the call from the Hibernian executives, the Irish Pensions Board said it was far too early to conclude that any degree of compulsion needs to be introduced for PRSAs.
PRSA products first became available in spring 2003 and from September 15 employers were legally required to provide access to a standard PRSA for their employees in certain circumstances.
IPB spokesman Aongus Horgan said sales figures for PRSAs to the end of December will be available next month. Some 6,707 PRSAs were sold by the end of September 2003. However, employers were making contributions to the PRSAs of just 2,454 workers at that time.
“A full review of PRSAs is to take place in three years and if at that time we have not moved substantially towards the goal of 70% of workers with pensions then it can be looked at,” Mr Horgan said.
Minister for Social and Family Affairs Mary Coughlan said when the three year review is completed the need for compulsory pensions will be considered.
In February of last year Ms Coughlan said: “There are statutory requirements to review the coverage position within three years and if, at that stage, we find that we were only on a scenic route to a mandatory pension requirement, that nettle will be grasped in the most appropriate way.”
