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Irish pension also fails to hit target despite 5% cap

The much heralded Irish price-capped pension product is failing to hit its target market even though it allows a 5 per cent bid/offer spread on top of a 1 per cent annual charge.

The state-sponsored personal retirement savings account, which has been put forward as an example for an alternative to the UK&#39s stakeholder, is being spurned by the Irish public, with only 3,500 sold to its target audience of 400,000 workers without employer pensions since it was launched last March.

All Irish employers must offer a PRSA by September 15 but do not have to make a contribution.

Many providers have extolled the virtues of the Irish charging structure as a blueprint for an increase in the 1 per cent stakeholder cap for the new Sandler suite of products.

Friends Provident pensions technical manager Chris Bellers says UK life offices are naive to think that an increase in the 1 per cent charge cap will increase stakeholder sales.

Bellers says: “The industry is indulging in wishful thinking if it thinks that increasing the 1 per cent charge is going to increase distribution to the target group when people have other demands on their money. The only way to really increase saving is either compulsion or to give more incentives for employers to offer contributions.”

But Norwich Union says price-capped products can hit the target if an increased charge is combined with a lighter-touch sales regime and consumer education. Director of distribution strategy Robert Fletcher says: “It is not just a change in the structure of the fees. We need a proper sales regime.”

Irish Life pensions marketing manager Tony Lawless says: “The charges that we have in Ireland are not enough that we can afford to pay anybody anything decent to advise consumers. Therefore, the PRSA will not hit its target market.”

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