Irish Building Society Calls For Extension Of Tax Relief On Savings

by Jason Gorringe, Tax-News.com, London

18 April 2003

Irish building society EBS wants to see the 42% top rate of tax relief extended so that those on lower incomes can derive greater benefits from taking out new Personal Savings Retirement Accounts (PRSAs), according to an Irish Examiner report.

EBS is the first non-pension provider to offer the PRSAs, and is planning to encourage individuals who do not at present have a pension plan to save for their retirement by offering a highly flexible version of the product. EBS has set itself a target of achieving a 10% market share in PRSAs.

Currently the top rate of tax relief is only enjoyed by those on higher incomes, with savers on lower incomes only entitled to a tax relief rate of 20%. This is thought to act as a major disincentive to contributing to a pension scheme.

In addition, recent statistics published by research firm Millward Brown IMS have shown an alarming indifference towards pensions amongst the Irish population. The findings showed that 60% of the 25-34 year olds questioned did not have a pension, whilst three quarters of those polled knew little or nothing about PRSAs. However, some 91% of respondents cited tax efficiency as a major factor in choosing a pension.

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