Call for higher PRSA tax relief

THE EBS building society yesterday lent its support to a call to give the top rate of 42% tax relief to people on low incomes who take out the new pension plans known as PRSAs, or Personal Retirement Savings Accounts.

EBS yesterday became the first non-pension provider to announce it will offer the new savings products. It is to launch a highly-flexible standard PRSA aimed at getting those without pensions to save for their retirement, said the building society’s head of savings and investments, David Earle.

Huge numbers of people on low incomes will get tax relief of just 20% on their pension savings, against 42% for those with higher incomes, which many regard as a serious disincentive.

EBS has backed the PRSA initiative and the role of the Pensions Board in making the Irish pensions market more transparent, said Mr Earle.

It hopes to gain 10% of the market and is confident of achieving this, given its 6% success rate with the SSIA government savings scheme.

EBS says its standard offering is superior to many of the more costly non-standard products on the market. Its flexibility is a “measure of our determination to make this pension offering the best available to those who buy our plan,” said Mr Earle.

But statistics published yesterday show a major lack of awareness about pensions among Irish people.

The findings show:

l 60% of people aged between 25 and 34 do not have a pension;

l 75% know little or nothing about PRSAs;

l 20% of those polled said they were too young;

l 30% had never thought about it;

l Less than 10% of those without a pension anticipate family or state support in their old age;

l 91% cited tax efficiency as their main priority in choosing a pension, followed by portability and flexibility.

Amongst people aged between 45 and 55, 36% do not have a pension, while 68% admitted to knowing little or nothing about PRSAs.

The survey was carried out by research firm Millward Brown IMS.