71% Of Irish Population Don't Understand Pension Tax Benefits

by Philip Morton, Investors Offshore.com

27 September 2006

According to survey results released by Bank of Ireland Life on Monday, 71% of the Irish population do not understand the tax benefits associated with a pension.

BoI observed of the findings that:

"Since almost half of the working population don't have a pension plan in place, this new finding will be hugely significant to the Government who are currently trying to tackle the country's pension crisis."

However on a more positive note, the research showed that 60% of people without a pension claim they can actually afford to contribute to one every month, even though they have not started one as yet.

Brian Sullivan, Head of Pension Sales at Bank of Ireland Life observed that:

"It appears that awareness of the pension tax benefits is now the main barrier to pension take-up and not affordability as previously thought. Over 1.2 million people in this country took out an SSIA, which offered a 25% Government bonus, yet a pension can offer almost double this incentive through tax relief. There are specialist pension advisers in every Bank of Ireland branch who can explain the tax relief available simply, and set-up a pension in just one meeting."

Other key findings of the survey were that:

• The biggest group of people (70%) without a pension but who could afford to pay into one were the 25-35 year olds.
• Almost 4 in 10 respondents claimed they could afford to make a monthly payment of EUR100-EUR200 to a pension.
• Only 6% of people felt they could afford to make a monthly payment of EUR300-EUR500 to their pension.

Mr Sullivan went on to stress the especial importance of making pension provisions for the self-employed, noting that previous research conducted by Bank of Ireland Life had indicated that just one third of the self-employed contributed to a pension.

He concluded:

"Some of the biggest worries facing the self-employed include managing their time and finances, the day-to-day running of their business, developing their product or service, and most importantly, getting a steady stream of sales. When you factor in all these concerns, quite often pension provision can fall to the bottom of the pile. Furthermore, many business owners see their business as their pension and so don't take out separate cover."

"However, few stop to think of the dangers inherent in relying on your business as your pension. Since we now know that most people don't understand the tax benefits of taking out a pension, we will be actively encouraging all those who are self-employed to start a pension and cut their tax bill before this year's 31st October tax deadline."

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