The Minister for Social, Community and Family Affairs in Ireland, Dermot Ahern, has unveiled details of the Personal Retirement Savings Accounts framework, which will form a significant component of the forthcoming Pensions Bill.
Ahern stated that he intends to enact the Pensions Bill before the end of the year with a view to having PRSAs on stream to the public in early 2002.
Ahern said: The objective of our pension policy is that all citizens will have an adequate income on retirement and the main components of this are the social welfare pension and an occupational/personal pension. The Personal Retirement Savings Account is a key element in our comprehensive pensions plan for the twenty first century.
The Pensions Board recommended the introduction of the PRSA in its National Pensions Policy Initiative report Securing Retirement Income. Complementing the Social Welfare pension, the PRSA will be a long-term personal investment account designed to allow people to save for retirement in a flexible manner.
The main features of the PRSA are as follows:
* Contracts will be between an individual and a PRSA provider
* There will be standard and non-standard PRSAs - Standard PRSAs will be an off the shelf product with charges capped at 5% of contributions paid and 1% per annum of the assets.
* Charges to a PRSA cannot be expressed in cash terms.
* PRSAs will be regulated by the Pensions Board.
* Employers who do not provide an occupational pension scheme for their employees, must provide access to at least one Standard PRSA.
* Employees can take PRSAs with them when changing jobs.
* Contributors to a PRSA will be able to suspend/reactivate premium payments without penalty.
* Contributors will be able to make contributions irrespective of employment status.
* Contributors will be able to transfer between PRSAs providers without a charge being imposed.
* Contributors will be able to take benefits from a PRSA from age 60.
* PRSA providers will be obliged to give contributors a Statement of Reasonable Projection of the value of the PRSA on a regular basis.
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