ISME calls for end to PRSAs in favour of SSIA-type pension

THE small business lobby represented by ISME has called on Government to scrap PRSAs (Personal Retirement Savings Accounts) and to introduce a State Group Pension Structure run by the National Treasury Management Agency.

This State scheme should provide incentives similar to the Special Savings Incentive Accounts (SSIA) initiative in order to encourage individuals to participate in a pension scheme.

Responding to threats by Anne Maher of the Pensions Board that PRSAs could be made compulsory on workers and employers, ISME said she was barking up the wrong tree.

Ms Maher’s suggestion was an attempt to “pass the buck” for the abject failure of her own organisation to sell the PRSA message, ISME said.

Mark Fielding ISME chief executive described Ms Maher’s warning as “mischievous”.

He said it was tantamount to the board taking the easy way out of their own failure to sell the PRSA concept to those lacking private pension cover. Employers have enough pressures without having to take responsibility for retirement savings for workers, he said.

He said the Pensions Board have so far failed to demonstrate any innovation in relation to addressing the pension’s shortfall.

Business is being asked to pick up the tab for their failure and for the lack of willingness of workers to take responsibility for their own retirement needs, Mr Fielding said.

So far just 19,000 PRSA contracts have been sold since they were introduced.

With labour costs the number one concern for small companies and a significant threat to small and medium enterprise (SME) competitiveness, he said the last thing it needed was a gun put to its head over employee pensions.

He said struggling small businesses could not face any further price pressures from whatever source no matter how good the cause may be.

Mr Fielding said any further increases, through pension contributions, would lead to a dramatic increase in business costs, due to smaller companies being more labour intensive, with the consequence of additional job losses.

He said SMEs could not afford to make a contribution to employees’ pension schemes due to the significant costs already being experienced by the sector, unlike he said bigger companies who have the resources to invest in company pensions.