SSIA savers ‘plan to reinvest’ money

MORE than half of Special Saving Incentive Account (SSIA) holders will reinvest all or part of their money when their accounts mature next year.

A new survey by the Irish Insurance Federation (IIF) says 53% of the 1.2 million account holders plan to save their funds, but an increasing number will spend the money. Some 19% of SSIA holders plan to splash out all or some of their cash, more than double the figure in a previous survey by the IIF.

While there are fears that the country will go on a spending spree when the accounts begin to mature from the middle of next year, more than two-thirds of those surveyed believe the Government should put some incentive in place for those looking to transfer their money to a pension plan.

The Federation’s chief executive Mike Kemp said he was concerned at the increase in those planning to spend rather than save their money.

“We believe that the opportunity created by the SSIA scheme will be lost if measures are not introduced to incentivise individuals to transfer some or all of these funds into pension or similar savings products.”

He said the IIF has already proposed to Government that financial incentives be introduced to encourage SSIA account holders to reinvest in retirement savings.

“In our last pre-Budget submission we recommended a waiver of the SSIA tax liability of 23% if the saver puts at least 50% of the total SSIA maturity value in a personal pension,” Mr Kemp said.

“We also recommended a one-off lifting of pension contribution limits to facilitate such reinvestment of SSIA funds. Given that more people are now planning to spend their SSIA savings we call again on Government to consider these proposals.”

The Government has not yet decided whether to devise a successor to the SSIAs or allow a tax-friendly contribution to pension funds.

The IIF survey also found that 59% of workers would like to retire before they are 55. However, it found that many people expect to have to remain in employment until they are 65, if not longer.

Around one in four workers under 65 do not know how they will fund their retirement, while another 26% expect that the State pension will be their main income source in retirement.

Amongst those who do not have a personal or company pension, procrastination and affordability are seen as the main barriers to starting a pension.

A further 26% of respondents without a pension stated they “haven’t got around to setting up a pension yet” and 23% stated they “can’t afford a pension”.

Figures released earlier month to mark national pensions action week revealed that around 900,000 of the country’s 2m workforce have no pension plans.