Low awareness of pensions legislation: survey

47% of Irish business managers claim to be unaware of the impact of the Pensions Amendment Act 2002 on their business, according to a survey by Deloitte & Touche.

The Act, which became law in April 2002 affects all employers, regardless of size and whether or not they provide a pension scheme for their employees. It obliges employers to provide mandatory access to at least one standard Personal Retirement Savings Account (PRSA) by September 2003.

The survey of 303 business managers shows that awareness of the Act and its implications is highest among finance directors (71%), followed by CEO's/MD's (59%).

The sector most aware of the legislation is property and construction (86%) - probably, due to the large number of small businesses and self-employed people in the sector. This is followed by the financial services sector (52%) and the technology, media and telecommunications sector (51%).

Among those who are aware of the Act there is a high level of awareness concerning the main implications of the legislation: 85% of those who know about the Act claim to be aware that "companies which already have an occupational pension scheme are affected by the introduction of PRSA's".

Most of the companies surveyed (65%) already provide Contributory Pension Schemes. Contributory schemes are most prevalent among companies who have been in operation for more than 10 years as well as semi-state operations.

Non-contributory pension schemes are available through 35% of companies, particularly those in the financial services sector and subsidiaries of overseas companies. Defined benefit schemes occur in larger companies which have been in business for more than 20 years or

multinationals.

Defined contribution schemes are more prevalent in smaller to medium sized businesses ie those with a turnover between €5m and €10m and between 11 and 100 employees.

Commenting on the results, Brian McDonald, Tax Partner in Deloitte & Touche said: "The survey shows a high level of complacency among Irish business managers towards the new pensions legislation. The Pensions Act introduced considerable additional complexity, regulation and compliance requirements into our pensions legislation - with pensions now becoming an issue for

every employer and manager".

"For employers who currently operate a pension scheme there may be pressure from existing or future members to introduce a PRSA. This would give members of the scheme wider choice over how they might receive their benefits," he continued. The deadline that has been set for employers to make a PRSA scheme available to their employees in 15 September.

"The implications of this Act are significant" said Brian McDonald. "Employers need to give serious consideration not only to how the Act will affect them, but how those effects are to be handled".