| Industry calls for simplification of legislation |
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Mixed reactions to the Pension Bill have highlighted the need for a simplification of the Irish pension market legislation. The Pensions Amendment Bill 2001 completed both stages of Oireachtas scrutiny in early April - and with it introduced the much heralded pension product Personal Retirement Savings Accounts (PRSAs).
However some pension professionals believe that much of the Bill is confusing and overly complex and the Irish Association of Pension Funds has called on the Government to establish a review body to simplify the increasingly complex nature of Irish pensions.
Meanwhile Anne Maher, the Pension Board’s chief executive has welcomed the bill and said ‘the new Act will provide Ireland with a good structure for private pensions.’
Although PRSAs are designed to be flexible, low cost and attractive to all they are specifically designed for the self-employed market. Their introduction is being welcomed by the self-employed and certain company directors who will also be able to avail of them. However PAYE workers have been somewhat over-looked: substantial barriers to the transfer of some pension scheme benefits to PRSAs have been erected in the bill. For example employees with more than 15 years service will be prevented from transferring their pension scheme benefits to a PRSA on leaving the service.
Commenting on the bill several pension fund specialists also point out that ordinary employees can not avail of the option to select an Approved Retirement Fund (ARF) under their main pension scheme instead of an annuity which provides a fixed income for life on retirement. They can often access ARFs through their Additional Voluntary Contribution but as these are normally substantially smaller than the main fund, the full benefit of these will not be available.
However some positive aspects of the bill include the obligation of employers to provide access to PRSAs if they do not already have a pension scheme and the introduction of a Pensions ombudsman scheme to provide a new forum for dispute resolution.
Several changes to the pensions Act 1990 include, improving the position of pension scheme members such as improved vesting and value of benefits for early leavers with effect from June 2002. |
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| Article appeared in the April 2002 issue.
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