PRSA sales slump reinforces criticism

CRITICS of the Government’s troubled pensions initiative have been given fresh ammunition, after new figures show a slump in sales of Personal Retirement Savings Accounts (PRSAs).

The Pensions Board, the body charged by the Government with boosting the take-up of individual pension plans, said only 9,000 new PRSAs were opened in the three months to December. This compared with more than 12,000 new sales in the same period in 2003. The last quarter of the year is considered a key period for the sale of pension products because awareness of the tax breaks associated with pensions tends to be at its highest.

Only 27,000 PRSAs were sold during 2004. This compared unfavourably with the 19,000 sold in the second half of 2003, when the initiative kicked off.

The figures bear out comments made recently by pensions and investment company Friends First, which said the PRSA initiative was “not working” and that the government needed to do much more to reach its target of having 70% of the population covered by pensions. Only 50% of people have pensions in place.

However, Pensions Board chief executive Anne Maher said pensions awareness was high and that the board’s upcoming campaigns would convert this awareness into positive action. The board plans a pensions action week later in the year to stress the need for personal retirement planning.

There was good news, however, on the total value of funds held in PRSAs, which surged 70% to €178 million as investment values rose and existing PRSA holders pumped extra money into their funds. “The significant rise in the asset value illustrates a growing confidence in PRSAs from an investment point of view,” said Ms Maher.