Plea over savings scheme to boost pension funds

One of the country’s leading finance firms today urged the Government to consider bringing in a SSIA-style savings scheme to boost pension funds.

Irish Life claimed a bonus type payment for saving would transform the appetite for pension provision among young people.

Brendan McEvoy, Irish Life marketing manager, said the company was eagerly awaiting Government plans for reforms to the pension system.

“Our research indicates that if the Government simply changed the way they rewarded people for saving for pensions, that they could transform the appetite for pensions,” he said.

“It’s quite clear that the public want a clear, simple and transparent way of rewarding those who save for their retirement. The SSIA model fits perfectly and needn’t cost the exchequer any more that the current system.

Mr McEvoy said the Government should consider swapping favourable tax treatment of pension investments for SSIA-style investments.

“If the Government makes this relatively painless change, it will transform the outlook for pension provision,” Mr McEvoy said.

“Under the current tax scheme, just 21% of people with no pension provisions indicated that they were extremely or very likely to start a pension this year.

“However when we suggested that the Government move from the current tax arrangement to an SSIA style Government payment to match the savings being made privately, the figures leapt to 54%.”

With this year bringing maturities from the first of the SSIA accounts set up five years ago, Mr McEvoy cautioned against some of the hype surrounding the scheme.

“Despite what many people might suggest, 2007 will be the more significant year for SSIA maturities,” he said.

“Over 57% of all the SSIA’s undertaken will in fact mature in one month - April 2007. This year by contrast just 31% of SSIA’s will mature in the eighth months between May and December.”

Meanwhile, a survey by the company found 37% of people expected to be better off in 2006 than they were last year. Just over half said they expected to be about the same and only 8% said they expected to be worse off.

A year ago 12% expected to be worse off and 34% expected to be better off than in 2004.