Plea to banks over 'attractive' pension packages

Banks and financial institutions must design more attractive pension packages for consumers to encourage them to invest in retirement nest eggs, Social & Family Affairs Minister Seamus Brennan said today.

Mr Brennan said the industry must promote products that are more flexible and user-friendly to individual job sectors.

The TD told today’s Irish Pensions Forum in Dublin Castle that it was unacceptable that 85% of workers in the hotel and restaurant industry have no private pension cover.

He estimated that there was currently €2.5bn in tax breaks to pension providers who he said should increase their coverage among consumers.

“For a start they could dive into the hotel and catering industry and make special offers and deals.

“The industry should invest more in bringing the message of the incentives that are available,” he said.

Calling for more flexible pension packages, he suggested: “Instead of locking your money away for 40 years, you can dip in every couple of years and take out small amounts to meet various expenses.

“They should design products like that and then bring them to people that need them, like the hotel and catering, construction and retail sectors.”

Mr Brennan earlier told forum delegates that the Government was giving serious consideration to pensions reform and viewed it as an inter-generational issue that went beyond day-to-day politics.

In a bid to encourage more people to take out retirement packages, Finance Minister Brian Cowen recently announced that the state will contribute €2,500 for every €7,500 of SSIA savings, if invested in a pension.

Mr Brennan explained: “This will help us capture some of the savings in these accounts and consolidate them into long-term pensions savings, especially for low and middle-income earners.”

The National Pensions Forum, which was organised by the Pensions Board and the Social & Family Affairs Department, is timed to coincide with National Pensions Action Week which aims to encourage greater take-up of private pensions in Ireland.

A recent Pensions Board survey found that 64% of respondents believed that pensions should be compulsory.

Half of those questioned also said they would be willing to pay a higher PRSI rate to fund security in later years.

The forum was addressed by international experts with experience of state pension schemes in the UK, Australia and New Zealand.

Mr Brennan referred to the KiwiSaver initiative introduced in New Zealand.

“The scheme makes no mention of the word ’pension’ at any time, anywhere. It appears the word pension turns off young people. Perhaps the Kiwis have stolen a march on the rest of us,” he said.