One Direct enters pensions market

ONE DIRECT, the An Post subsidiary, has entered the pensions market.

The financial services firm, which is based in Athlone, Co Westmeath, and claims over 100,000 customers, yesterday launched its Personal Retirement Savings Account (PRSA) in partnership with Ark Life, the life and pensions subsidiary of AIB.

The company already provides personal loans, savings and investment products and insurance.

Tim McCarthy, One Direct’s managing director, said the company chose Ark Life because of its strategy of selling only standard PRSAs. Most PRSA providers offer both standard and non-standard versions of PRSA.

Standard PRSAs have a cap on charges of 1% of asset value or 5% of contributions, which One Direct said was more attractive for its customers. There are over 50 approved PRSA products on the market at present, with non-standard products accounting for around 60% of these.

PRSAs have enjoyed mixed success since their launch earlier this year. Take-up levels have been lower than expected as the Pensions Board, which aims to increase pension awareness and promote the take-up of private pensions, says approximately 6,700 PRSAs have been sold so far.

Employers have been legally obliged to offer employees the option of contributing to a PRSA since September. Over 50,000 employers have registered as PRSA providers to date.

One Direct said a key advantage of its offering was that customers can pay their PRSA contributions by direct debit, cheque or over the counter at their nearest post office.

It added that One Direct’s entry to the pensions market would help achieve the government’s goal of ensuring greater take-up of private pensions among Irish people.

Ark Life said it was pleased to be part of One Direct’s initiative and added that it would help make pensions more accessible to a broad range of customers.

AIB and Ark Life claim to have captured 38% of the PRSA market so far. The Pensions Board estimated that there were approximately €5 million invested in PRSA assets at the end of September. It hopes to increase pension coverage in Ireland from 50% to 70% of the population.

Most of the major players in the Irish financial services industry are active in the PRSA market, and it is believed they have concentrated on signing up employers rather than marketing PRSA products to the public.