Employers warned over staff PRSA take-up

Employers have been warned by the Pensions Board to play a more active role in facilitating the take-up of Personal Retirement Savings Accounts (PRSAs) by their staff.

It has also signalled its intent to pursue roughly 30,000 businesses which, it understands, have yet to offer either an occupational pension option or a PRSA to their employees.

Announcing quarterly figures on the take-up of the Government's flexible pension accounts, a spokeswoman for the Pensions Board said it was "very concerned at the number of 'inactive' employer designations" in existence.

Although 72,779 businesses have now designated a PRSA provider for staff not covered by other workplace pension provision, staff at just over 10 per cent of these companies have actually signed up for one of the pension accounts.

"It is not enough for employers to just notify employees that the company has a PRSA provider," the Pensions Board said. "The employer must notify employees excluded from other occupational pension provision of their right to contribute to the chosen PRSA.

The board, which regulates pension provision in the Republic, also reminded employers that they were obliged to give whichever company they designated as a PRSA provider access to the workforce to explain pension provision. "Ideally this exercise should be repeated on a regular basis and particularly to facilitate new employees joining a company.

At the end of June, 17 months after PRSAs were first introduced, only 55,011 people have opened a personal retirement savings account. Less than half of these, 23,658, were opened through the workplace.

The figure represents an 8.3 per cent increase over the first quarter and 67 per cent ahead of the same point last year.

A total of €270.5 million in assets is now held in PRSA accounts, 20 per cent more than at the end of last March.

PRSAs were introduced with a view to increasing private pension coverage from 50 per cent of the workforce to 70 per cent. They were targeted at people in smaller companies that might not necessarily offer occupational pension coverage and at those who might not be in full-time employment but wished to provide for their retirement.

However, although 10 companies are offering a range of PRSA products, the take-up has not met Government expectations and Seamus Brennan, Minister for Social and Family Affairs, has brought forward a review of national pensions policy.

It is considering, among other proposals, compulsory pension savings.

The board has also reiterated its determination to pursue employers who have yet to register with a PRSA provider as required under the legislation.

Mary Hutch, head of information and training at the Pensions Board, said monitoring of employers' compliance with their obligations continued to be a high priority for the regulator.

The board has already prosecuted a handful of employers for failing to register with a PRSA provider as required in September 2003.