The National Pensions Review has recommended extending 42% tax relief to everybody who makes pension contributions. At present only high income earners receive that level of tax relief.
The review has also recommended incentives to encourage the proceeds of SSIAs to be invested in pensions. The report suggests that the Government match contributions by individuals who put money into PRSAs or portable pensions.
The report from the Pensions Board said that pension coverage was currently insufficient and was a cause for concern. 'There does not appear to be any improvement in the adequacy of pension provision,' it said.
The board said most of its members agreed that pension coverage and adequacy targets would not be met without some change to the present pension system. But it added that while some argued for improvement in the current system of voluntary pension contribitions, others believed a mandatory approach was the only way of achieving the targets.
Responding to the report, Social Affairs Minister Seamus Brennan said that although improved incentives should deliver increased pensions coverage, the option of some sort of mandatory system should be further explored.
He said the idea of a matching contribution from Government had merit, it would have to be carefully examined and fully costed.
Minister Brennan also said he would look at the review's proposal to allow people to defer taking a social welfare pension at age 65.
He said he was call together all interested parties to discuss the issues surrounding pensions at a national forum, while pensions would also be on the agenda at the next round of social partnership talks.
In the budget, Finance Minister Brian Cowen said he would be considering bringing forward measures to address the issue in the upcoming Finance Bill.
* The Irish Association of Pension Funds today welcomed the publication of the Pensions Board's report on the National Pensions Review. But it has urged Seamus Brennan to ensure that all forms of pension provision operate on a level playing field from a tax perspective.
The Professional Insurance Brokers Association, which represents over 820 independent brokers throughout Ireland, says today's recommendations are destined for success, if implemented. It added that they will have a major impact on the take-up of pensions.
Irish Life, the country's largest pensions company, has given a warm welcome to the Board's proposals to introduce an SSIA style incentive to encourage greater interest in pensions amongst the public. It says that research has found that the introduction of an SSIA style initiative would dramatically increase people's appetite for investing in pensions.
