A new study of florists, hairdressers and butchers has found that they would be more likely to start a pension if the Government introduced a bonus on their retirement savings to replace the existing tax incentives.
Researchers at the Smurfit business school at UCD found from a sample of 70 butchers, 50 hairdressers and 50 florists that 86 per cent of those without a pension would start one if the State gave a contribution of €1 for every €1 saved. The Irish Association of Pension Funds commissioned the study of service sector professions.
There have now been several calls for the State to build on the success of Special Savings Incentive Accounts (SSIAs) by applying their design to pensions.
The financial value of the bonuses offered under the SSIA scheme are thought to be more readily understood by workers than the current system of tax relief on pension contributions, even though the benefit of pensions tax relief is higher than the 25 per cent bonus on SSIAs.
The Government HAS said that bonuses on pensions contributions would be "at the heart" of the forthcoming Green Paper on pensions.
The IAPF surveyfound that take-up of pensions would increase significantly if tax relief on contributions was to be made available at the higher tax rate of 41 per cent for all workers.
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