Pension coverage falls despite State encouragement

Pension coverage in the State has fallen despite intensive Government efforts to encourage pension savings according to figures published yesterday by the Central Statistics Office (CSO).

The figures reinforce the call in the recent National Pensions Review for the immediate introduction of incentives to encourage voluntary saving for retirement.

The CSO data show that the percentage of people aged between 20 and 69 in employment with some form of private pension provision slipped to 51.5 per cent in the first quarter of 2005 from 52.4 per cent.

The only good news for Minister of Social and Family Affairs Séamus Brennan was that the percentage of women in the workforce with pensions rose slightly over the same period to 47.5 per cent from 46.8 per cent.

However, efforts to persuade younger people to start saving for retirement continue to founder. The percentage of workers aged between 20 and 24 paying into a pension scheme slipped to 21.9 per cent in the period from 23.2 per cent in the first quarter of 2004.

The figure is well short of the 25.2 per cent of people in the category with a pension back in early February 2002.

Pension coverage remains highest in Dublin and the commuter counties of Wicklow, Meath and Kildare.

The Irish Insurance Federation said it was "clear from this data that the Government's pension strategy is not working".

Niall Doyle, corporate affairs manager at the federation, said the Finance Bill, which will be published tomorrow, would provide the Government with a "once in a lifetime opportunity" to improve uptake of pensions.

"The Government cannot afford to ignore this issue any longer," he said.

Friends First chief executive Adrian Hegarty said the figures showed starkly how far away the Government was from its stated aim of ensuring that 70 per cent of those between the age of 30 and 65 have pension coverage.

The latest data show just 58.6 per cent of this group are saving for retirement, down on the 59.4 per cent a year previously and only fractionally higher than the 57.8 coverage in early 2002 before Personal Retirement Savings Accounts (PRSAs) were introduced.

"In case there was any doubt, the figures confirm the failure of PRSAs," said Mr Hegarty. "If this slide continues, compulsory pensions cannot be ruled out."

Mr Hegarty said one explanation for the "alarming" drop in pension coverage could be the failure of newer workers in the economy from other countries to provide for private retirement benefits.