The Government may need to force both employers and employees into taking out a pension if it wants to meet its targets for pensions coverage by 2006, the chief executive of the Pensions Board, Ms Anne Maher, will warn today.
Ms Maher will tell an Irish Insurance Federation (IIF) conference that the Government's goal for pensions coverage could be elusive, despite the "slow but steady" penetration of Personal Retirement Savings Accounts (PRSAs) in the Irish market.
Ms Maher believes that a further 350,000 workers will need to take out pensions between now and 2006 if the objective of raising coverage from 50 per cent to 70 per cent target is to be met.
She will tell delegates at the IIF conference that this could require the introduction of "mandatory" measures that would ensure that every employer and worker would make a contribution to a private pension.
"Clearly it should be looked at," she said yesterday, recognising that the competitiveness implications of such a move would have to be considered.
Ms Maher said there may also be some merit in introducing tax credits that could help foster greater pensions coverage among lower-paid workers. People on more modest wages need most encouragement to take out a pension, according to Ms Maher.
She will today describe the take-up of PRSAs to date as "a reasonable start in a difficult environment".
The IIF conference aims to define the gap between the amount Irish people are saving for retirement and the amount they should be saving. Helping to fill this "savings gap" is the central function of PRSAs.
The cumulative value of assets in PRSA products at the end of December stood at €41 million, with about 19,000 employees holding the portable pension structures at that date. The Pensions Board recommends that workers consider preparing for retirement from the age of 30.
Close to 60,000 employers had designated a PRSA provider at the end of last year.
These employers formed a group of about 130,000 organisations that were required by law to name a PRSA provider because they did not already have a company scheme or because certain staff were excluded from their scheme.
Employers who restricted scheme members from making additional voluntary contributions (AVCs) were also required to designate an investment company to supply PRSAs to its staff.
The Pensions Board is preparing to pursue employers who have yet to fulfil their PRSA requirements - as many as 70,000 organisations - and will take them to court on the issue if this becomes necessary.
This process will soon be aided by the Social Welfare PRSI Inspectorate, which will make 10,000 checks on PRSA designations each year.
