Pensions – The Big Picture

Andrew Nugent Assistant Head of Information Services

The Pensions Board

The Pensions Board

Established by the Pensions Act, 1990

• Main functions are set out in the Act and include– to monitor and supervise the operation of the Act and

pension developments generally

• Promoting pensions development, information and awareness is an associated support function.

• Board conducts the National Pensions Awareness Campaign (NPAC) on behalf of Government as recommended in the “Securing Retirement Income” report of the National Pensions Policy Initiative published in 1998

The Pensions Board Focus

Three key operational areas:

• Supervision, regulation and enforcement

• Policy, legal and actuarial

• Information and awareness

Board’s Powers

• Section 18 Authorisation – furnishing of information

• Section 58 Prosecution for non-remittance of deductions within 21 days

• Section 87 High Court order to have company pay ‘unpaid’ contributions to scheme

Regulation, Supervision and Enforcement

• Pensions Board taking tough approach for breaches of the Pensions Act

• Board recently obtained a High Court judgement against an Irish company for €186,000 in pension arrears

Main Types of Pensions

• Defined benefit (final salary pension)

• Defined contribution

• Personal Retirement Savings Account (PRSA)

Why a pension?Tax Relief on Personal Contributions

The maximum contribution rate as a percentage of total pay/net relevant earnings on which you can receive tax relief is:Highest age at any time during the tax year Limit Under 30 15% 30-39 20% 40-49 25% 50-54 30% 55-59 35% 60 and over 40%

Notes: Contributions will also be relieved from the PRSI and the Health Levy, if you pay these charges. For tax purposes these contributions are limited to earnings up to a maximum of €150,000 in any year.

Where will your income come from when you retire?

• The current state social welfare pension is €230.30 per week (or € 11,976 per year)

• Will this be enough to meet all your needs in retirement?

• Almost 80% say no!

• Company Pension Scheme (99,802 schemes with 800,398 members)(66% DB schemes and 34% DC schemes)(Fund assets approx €60 - €80 billion)

• Personal Retirement Savings Accounts (PRSAs)(Over 155,000 PRSAs with asset value of €1.19 billion- Dec 2008. 88,213 employers had signed up with a PRSA provider )

• Personal Pension Plans and Retirement Annuity Contracts (RACs) (In excess of 200,000 contracts – Irish Insurance Federation)

• Voluntary regime for supplementary pension provision

Irish Private Pensions – the Context

Employers’ Obligations/Opportunity

Access for all Employees

– By law an employer must provide ALL employees with some form of access to a pension, whether they are in full-time, part-time, temporary, contract or casual employment.

– All employers regardless of the size of their workforce are obliged to provide access to a Standard PRSA if those employees fall into the category of “excluded employees” (details available on the Board’s website).

– Pensions Board encourages employers to regard pensions as part of the recruit, reward & retain approach to staff

– Pensions Board also encourages all employees to ask the employer about their pension rights

Public Service Pensions

Options to boost retirement income:

• Notional Service (Added/buying back years)

• AVCs

• PRSA as an AVC

Be clear about what you want

Changing demographics

2006 2026 2056

No’s at Work 2,000,100 2,268,000 2,125,000

Aged over 65 464,000 844,000 1,532,000

No’s at work per person over 65

4.3 2.7 1.4

Current policy issues

• Green Paper on Pensions published in October 2007, followed by consultation phase which is now completed

• Commission on Taxation to consider how best the tax system can encourage long term savings to meet the needs of retirement

• Pensions also a commitment in Programme for Government

• Recent social partnership agreement which includes a commitment to produce legislation on the transfer of undertakings

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Further information

Pensions board website provides;

– Checklist which provides information and a questionnaire to help you inform yourself about how to provide for your retirement

– Pensions calculator allows you to estimate the amount of money needed to contribute to your pension in relation to your age yearly salary to end up with the level of pension you expect in retirement.

We all have a responsible role to play in…..

….actively promoting pensions take up !