Doubts surface over ambitious pension plan

THE pension revolution expected when the new personal savings plans are launched next month may not happen, experts have warned.

To date, credit unions and other potential players have shown no interested in getting involved in the new pensions drive aimed at getting 70% of Irish workers contributing to a pension scheme.

At present less than 50% of Irish workers have cover.

VHI, BUPA and super store groups such as Tesco were seen as likely players in the new pensions environment, aimed at those excluded from private pension cover.

To date 17 applications have been sent to the Pensions Board, but all of them are from the traditional sector of the industry.

In early February nine of the firms are due to launch their low cost range of products on the market.

On offer will be a host of Personal Retirement Savings Accounts, known as PRSAs.

By early summer it will be compulsory for all employers, big and small, to make them available to workers if they have no other pension scheme in operation or if new workers are excluded from existing plans.

Even shop keepers employing just one worker will have to provide a plan and to make deductions from the person’s wages as part of the new push by government to get more people protected by retirement schemes.

Last night a spokeswoman for the Pensions Board confirmed it has not received applications from outside the mainstream,” she said.

It was thought the VHI, possibly BUPA, and some of the bigger credit unions might want to get involved in selling the new pension plans once they become law, but that level of interest has not materialised since the board opened for applications in November In a recent issue of Irish Pensions Magazine Nigel Dunne, marketing manager with Standard Life, warned that the PRSAs would not stop the pension timebomb.

Experience elsewhere, and specifically in Britain shows only individuals who are pensions-conscious will make provision for their old age.

“The launch of a low-cost flexible product in itself will not be enough to significantly increase pension coverage,” he warned.

Joseph O’Dea at Watson Wyatt said his concern was that the rising cost of pension cover will result in the lowest common denominator becoming the norm for the market.

He fears that companies which offer good cover will phase out their costlier plans and just make the PRSAs available.