PRSA sales disappoint

A total of €646.6 million is now invested in Personal Retirement Savings Accounts (PRSAs), the flexible pension vehicle introduced by the Government in 2003 to increase the number of people with private pensions.

However, sales of the products continue to disappoint. The 10 PRSA providers have sold only 15,533 accounts so far this year, slightly more than in the same period in 2005.

Altogether, just under 84,000 PRSA accounts have been opened since the scheme was established. The bulk of the accounts opened are standard PRSAs, where fund managers are limited in the amounts they can charge.

PRSAs were designed to provide a retirement savings options for workers in companies - particularly small enterprises - that did not already offer an occupational pension scheme. They were also open to people outside the workforce to invest in.

However, the take-up by employees has been poor. Just 33,274 employees working in 10,168 companies have opened accounts.

A further 69,326 companies have registered, as required, to allow employees to avail of the PRSA option, but none have.

Around 50,000 employers, according to figures originally supplied by the Pensions Board, have failed to register for PRSAs three years after they were required to do so. To date, only a handful of these companies have been taken to court.

Sales of PRSAs tend to jump in the final three months of the year as people paying paying tax under the self-assessment regime face their annual tax deadline.

Last year, the fourth quarter accounted for 41 per cent of all PRSA accounts opened during the year.

The Pensions Board has accepted that changes will need to be made if people are to invest in retirement savings.