Companies struggle to sell savings scheme

FEWER than 3,500 people have signed up for the Government-backed Personal Retirement Savings Accounts (PRSAs) scheme almost five months after it was launched.

The savings accounts were designed to make it easier for people without company pensions to save for their retirement but the public is unwilling to invest in the scheme.

One of the country’s leading finance experts last night said PRSAs should be scrapped as companies struggle to sell the complicated product.

Consumers’ Association of Ireland (CAI) finance spokesperson Eddie Hobbs said an independent authority must be established to create a new pension scheme.

“It’s been a cock-up and everyone will have to go back to the drawing board to come up with a completely new and alternative scheme that works,” he said.

The Government hoped the scheme would boost the number of workers with pensions from 50% to 70%.

To date AIB’s Ark Life Assurance company has been one of the biggest sellers of the pension with just over 1,400 people signing up.

Bank of Ireland subsidiary New Ireland Assurance has sold 750 pensions but the company is aiming to capture 25% of the PRSA market, which requires tens of thousands of sales. Irish Life Assurance sold 1,000 pensions but Hibernian Life and Pensions Ltd has only attracted 24 PRSA clients so far.

Custom House Capital Ltd admitted that it has failed to sell any pensions but chief executive Harry Cassidy defended the scheme. “I don’t think the pension market really gets going until the autumn when people start getting their tax affairs in order. We expect there will be a lot of interest in PRSAs then,” he said.

The Irish Pensions Board also said that PRSAs still have a future despite the lack of interest in the product.

A spokeswoman for the board said a marketing drive supported by the Department of Social and Family Affairs should dramatically increase PRSA numbers in the coming months.

Employers must provide staff without a pension access to a PRSA from September 15 next, a board spokeswoman said. “From that date onwards we would expected a major increase,” she said.