Pensions Board gets tough over PRSAs

The Pensions Board has written to 64,000 employers who it suspects have not complied with legislation requiring that they ensure all employees have access to pensions.

In the letter, the Pensions Board's head of PRSAs, Mr Philip Dalton, warns employers that failure to comply with the legislation is a criminal offence that could result in a fine of up to €12,700 and/or up to two years' imprisonment.

The employers have been requested to complete a questionnaire consisting of five questions clarifying their position. They must return the questionnaire by September 30th, 2004.

The 64,000 employers on the board's mailing list are those who do not have a registered occupational pension scheme or who appear not to have appointed a Personal Retirement Savings Account (PRSA) provider.

Under legislation that came into effect in September 2003, if an employee is excluded from an occupational pension scheme after more than six months' service, the employer must appoint a PRSA provider and deduct contributions from payroll at the employee's request.

The Pensions Board, the statutory body responsible for monitoring pension schemes and PRSAs, said last month that it planned to prosecute six companies who have not complied with the access rules and who have subsequently failed to respond to the board's investigations.

Mr Dalton confirmed yesterday that these prosecutions are at an advanced stage.

PRSAs were introduced to the pensions market to help the Government achieve its target of increasing the percentage of workers with their own pension from 50 per cent to 70 per cent.

Around half of the 33,000 people who have taken out PRSAs have done so through their employer and the Pensions Board believes that a higher compliance rate will improve take up.

However, by the end of June 2004, fewer than 62,000 employers had appointed a PRSA provider, out of a total of 170,000 registered employers.

The Pensions Board is following up reports from whistleblowers and is carrying out random and targeted inspections.

Social welfare inspectors who are conducting checks on employers in relation to Pay Related Social Insurance (PRSI) obligations are now empowered to also monitor pensions compliance. Some 8,000 inspections will be carried out each year.

The Pensions Board is encouraging all employees who do not have a pension to ask their employer about access to one. Anyone with a query can contact the board on its lo-call information phone line on 1890 656 565.