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PENSIONS & SSIA SAVERS. Anne Maher Chief Executive The Pensions Board 28 February 2006. Agenda. Current Irish pension structure National Pension Review Pension opportunities for SSIA holders. 2. Current Irish Pension Structure. State universal basic benefit - PowerPoint PPT Presentation
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Anne Maher
Chief Executive
The Pensions Board
28 February 2006
PENSIONS & SSIA SAVERSPENSIONS & SSIA SAVERS
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AgendaAgenda
Current Irish pension structure
National Pension Review
Pension opportunities for SSIA holders
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Current Irish Pension StructureCurrent Irish Pension Structure State universal basic benefit
• Either Old Age Contributory Pension or Old Age Non-Contributory Pension
• “Pay as you go” supported by National Pensions Reserve Fund
Private voluntary supplementary benefit• Includes occupational pension schemes, personal
pensions and Personal Retirement Savings Accounts (PRSAs)
• Funded on Defined Benefit or Defined Contribution basis• Covers 51.5% of workforce
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Current Irish Pension StructureCurrent Irish Pension Structure
Recent initiatives to increase private pension coverage
Personal Retirement Savings Accounts (PRSAs) Mandatory Employer Access National Pensions Awareness Campaign
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Current Irish Pension StructureCurrent Irish Pension Structure
Concern over private pension coverage
Concern over private pension adequacy• Defined Benefit scheme – deficiency problem• Defined Contribution scheme – low contribution levels
September 2006 statutory progress review brought forward to 2005
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NATIONAL NATIONAL PENSIONS PENSIONS REVIEW REVIEW
The ReportThe Report
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National Pensions ReviewNational Pensions Review
Report
Reviews agreed pension targets
Reviews current coverage and adequacy
Considers how to sustain Social Welfare pension
Considers options to meet targets
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National Pensions ReviewNational Pensions Review
Key messages
Significant cost increase for Social Welfare pension
Good pension provision costs a lot
Changes need to be made
Should build on existing good base
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National Pensions ReviewNational Pensions ReviewSocial Welfare Pensions
Significant increase in cost
Projected cost of pensions as a % of GNP
2006 2016 2026 2036 2046 2056
3.0% 3.7% 4.9% 6.5% 8.7% 10.1%
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National Pensions ReviewNational Pensions Review
Social Welfare Pension Options
Increase retirement age
PRSI / Taxation increases
Increase payment to NPRF
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National Pensions ReviewNational Pensions Review
Supplementary Pensions
58.6% of over 30s in the workforce have supplementary pension coverage
51.5% of the total workforce have supplementary pension coverage
No progress towards adequacy target
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National Pensions ReviewNational Pensions Review
Supplementary Pension Options
Enhancements to Voluntary System
Mandatory Pensions
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National Pensions ReviewNational Pensions Review
Recommendations for Immediate Implementation
SSIA style tax delivery for PRSAs
Higher rate tax for all personal pension contributors
Reduced Standard PRSA regulation
Incentives on SSIA proceeds
Retirees option to defer Social Welfare pension
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National Pensions ReviewNational Pensions Review
Areas Identified for Further Consideration Include:
• Progress review in 2008 • Research on women’s coverage• Regular projection of pension costs• Automatic enrolment• Mandatory pension provision• Pensions awareness campaigns• State retirement support
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Pension Opportunities for SSIA Pension Opportunities for SSIA HoldersHolders
Tax reliefs for pension contributions• Under 30 = 15% of earnings• 30 – 39 = 20%• 40 - 49 = 25%• Over 50 = 30%• Over 55 = 35%• Over 60 = 40%
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Pension Opportunities for SSIA Pension Opportunities for SSIA HoldersHolders
Transfer of SSIA monies into RACs/ PRSAs/ AVCs by lower income holders:• €1 for every €3 transferred• Subject to maximum bonus of €2,500• Waiver of exit tax• Applies to SSIA holders taxable at 20% or exempt from
tax and subject to income limit of €50,000
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What Happens Next?What Happens Next?
Government are considering response to National Pensions Review
Pensions is to be discussed at Partnership talks Minister Brennan
• Has asked Pensions Board to do work on mandatory pension option
• Is holding a Pensions Forum to stimulate public debate and move issue forward
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In ConclusionIn Conclusion New transfer option for SSIAs to pensions is
attractive for those on lower tax rate Pension tax reliefs make pension investment a
strong option for all SSIA holders who want to:• Reinvest• Continue savings habit
Ireland needs changes in pension structure
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