Only 27,000 of Ireland's stakeholder-style pensions have been sold in the product's first year even though it allows a 5 per cent bid/offer spread plus a 1 per cent annual charge.
Irish consumers are spurning the state-sponsored Personal Retirement Savings Account even though its charging structure is what many life offices see as the solution to tumbling pension sales in the UK. Premiums placed into Irish PRSAs in the year to March 2004 total just £41m.
Next week, the Treasury is expected to announce whether the stakeholder 1 per cent charge will be raised. Many industry figures are predicting an increase in commission to 5 per cent on contributions plus a 1 per cent annual charge.
All Irish employers which do not offer an occupational scheme have to give access to a PRSA, although no contribution is required.
The Irish Pensions Board estimates that another 300,000 workers need to take out a PRSA if pension coverage across the workforce is to increase from 53 per cent to 70 per cent.
Irish Life pensions marketing manager Tony Lawless says: “At the last count, three providers using direct salesforces had 78 per cent market share. This is not being sold by brokers in Ireland even though they have two-thirds of the market across financial services distribution generally.”
Standard Life senior technical manager John Lawson says: “I am quite surprised to see these figures from Ireland. But what we need in the UK is a two-pronged attack, with an increase to Irish levels of commission to pay for advice as well as tax incentives for employers to offer contributions to staff through workplace schemes.”