The Pensions Board calls on SSIA account holders to invest in their pensions
Maintaining the savings habit is good for you
Monday 24 July 2006: The Pensions Board has today called on SSIA holders to consider investing in their pensions when their accounts come to fruition. The Board is highlighting the tax incentives in contributing to a pension. The CSO Quarterly National Household Survey 2005, highlighted that in the fourth quarter of 2005, SSIA account holders indicated that over 46% of their fund will be committed to savings, pensions and investments.
Speaking today, Mary Hutch, Head of Information and Training said: “As SSIA accounts continue to mature, now is the time to start planning for the future. We would encourage SSIA account holders to roll over all or part of their savings into a pension and keep up the saving habit. A very encouraging outcome of the SSIA scheme is that a high proportion of the savers are young first time savers who now have an opportunity to start a pension early as it is a tax efficient way of saving for future retirement. The Board have developed a series of calculators which are available on the website at www.pensionsboard.ie to help guide and inform people with their savings options. The continuation of the saving trend for these groups post SSIA could provide a significant pensions boost among one of the groups where pensions coverage traditionally tends to be low.”
The Minister for Finance, Brian Cowen, through the Finance Act 2006 included incentives for lower income SSIA holders. The Act provides that the Exchequer will pay a bonus directly into the pension account of €1 for every €3 transferred, up to a maximum bonus of €2,500. In addition, the exit tax on cashing one’s SSIA on maturity will be refunded in proportion to the amount of SSIA transferred into the pension account. The bonus and exit tax refund will be an alternative to normal pensions tax relief at one’s marginal tax rate. This incentive is restricted to SSIA holders with an income limit of €50,000.
“In essence, a pension is a more profitable scheme than an SSIA, but it is simply conducted over a longer term. The Pensions Board is confident that SSIA holders will realise the importance of long term financial planning and take the necessary action required to continue a positive habit of saving for their futures,” said Mary Hutch.
Further information on the incentives is available from the Department of Finance or on their website at www.finance.gov.ie
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About The Pensions Board
The Pensions Board is the statutory body set up to regulate occupational pension schemes and PRSAs and to advise the Minister for Social and Family Affairs, and through him, the Government, on overall pension policy development.
The 2006 Finance Act provides a special incentive to the lower paid to reinvest all or part of their SSIA proceeds after maturity into an approved pension product. For every €3 of SSIA proceeds reinvested by an eligible SSIA holder in a pension product, the Exchequer will contribute €1 by way of a tax credit. Further information on this incentive is available on www.revenue.ie .
The Information unit at The Pensions Board provides a wide range of pension information booklets free of charge and can be reached at the LoCall number 1890 656565 and on www.pensionsboard.ie.
Head of Information and Training
The Pensions Board
Tel: (01) 613 1900
Jackie Gallagher / Mark Leech
Tel: (01) 4751444
(087) 237 1838