State faces more pension pressure as PRSA sales fall

Sales of the Government's flexible pension alternative, the Personal Retirement Savings Account (PRSA), fell last year according to figures published yesterday.

The data will increase pressure on the Government to introduce new measures to boost retirement savings.

A total of 22,000 PRSAs were sold in 2005, an 18.5 per cent slide on the 27,235 opened a year earlier. A total of 68,257 PRSA accounts are now open.

The 10 licensed providers of PRSAs sold 9,006 of the pension products in the final three months of the year - more than 40 per cent of the total sales in 2005 - but even this was lower than sales in the equivalent period in 2004.

Pensions Board chief executive Anne Maher said the figures "do not show any change in the overall trend of PRSA take-up".

While 76,304 employers have now registered as required with one of the PRSA providers, just 27,381 employees at these firms have availed of the opportunity to open an account.

The Pensions Board has regularly expressed concern about the amount of information provided by employers to staff on pension savings and the figures indicate that close to 60,000 companies have failed thus far to register with a provider.

Ms Maher last night reiterated the finding of the recent National Pensions Review that "changes will need to be made in order to ensure future pension provision".

The Minister for Social and Family Affairs Séamus Brennan brought forward the review by a year largely because of the failure of PRSA sales to take off. He received the report last November but has yet to announce which recommendations will be implemented.

The Minister for Finance Brian Cowen did announce limited measures designed to encourage low earners to transfer some of the Special Savings Incentive Account (SSIA) savings into pension funds in the Finance Bill published on Thursday.

The Irish Association of Pension Funds (IAPF), the industry body, yesterday said that, while the once-off transfer bonus was to be applauded, "without further long-term incentives in this area, this pension savings vehicle will remain completely inadequate".

IAPF chairman Joe Byrne also noted that there were many people on higher tax rates whose current pensions provision was inadequate. "We feel the minister has missed an opportunity to use the SSIA window to address the pensions adequacy problem as well as coverage."

At the end of 2005, a total of €451 million was held in PRSAs in the State.