Anne Maher Chief Executive The Pensions Board 28 February 2006

1. PENSIONS & SSIA SAVERS Anne Maher Chief Executive The Pensions Board 28 February 2006

2. Agenda • Current Irish pension structure • National Pension Review • Pension opportunities for SSIA holders 2

3. Current 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 3

4. Current Irish Pension Structure Recent initiatives to increase private pension coverage • Personal Retirement Savings Accounts (PRSAs) • Mandatory Employer Access • National Pensions Awareness Campaign 4

5. Current 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 5

6. NATIONAL PENSIONS REVIEW The Report 6

7. National Pensions Review Report • Reviews agreed pension targets • Reviews current coverage and adequacy • Considers how to sustain Social Welfare pension • Considers options to meet targets 7

8. National 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 8

9. National Pensions Review Social Welfare Pensions • Significant increase in cost • Projected cost of pensions as a % of GNP 9

10. National Pensions Review Social Welfare Pension Options • Increase retirement age • PRSI / Taxation increases • Increase payment to NPRF 10

11. National 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 11

12. National Pensions Review Supplementary Pension Options • Enhancements to Voluntary System • Mandatory Pensions 12

13. National 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 13

14. National 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 14

15. Pension Opportunities for SSIA Holders • 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% 15

16. Pension Opportunities for SSIA Holders • 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 16

17. 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 17

18. In 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 18