1. National Pensions Action Campaign 2007 General Pensions Presentation David Malone Head of Information Services The Pensions Board

2. The Pensions Board Established by the Pensions Act, 1990 Main functions are set out in the Act and include –to monitor and supervise the operation of the Act and pension developments generally Board has 2 statutory roles – regulatory and policy Promoting pensions development, information and awareness is an associated support function. Board conducts the National Pensions Awareness Campaign (NPAC) on behalf of Government as recommended in the “Securing Retirement Income” report of the National Pensions Policy Initiative published in 1998

3. National Pensions Action Campaign 2007

4. Where will your income come from when you retire? The current state social welfare pension is €209.30 per week (or € 10,883 per year) …….will this be enough for you to live on ? 87% of the Pensions Board Consumer Research sample said that the State old age pension would NOT meet their needs in retirement

5. Why have a pension? Provision of regular income to replace earnings in retirement, or early retirement due to ill-health Provision of lump sum benefit income for surviving dependants Tax Reliefs Income Tax and PRSI relief on employee contributions Employer contributions not taxed as BIK (unless paid to PRSA) Pension schemes do not pay income or capital gains tax on investment returns. Part of your retirement benefit may be paid as tax-free cash sum

6. Tax Relief on Personal Contributions The maximum contribution rate as a percentage of total pay/net relevant earnings on which you can receive tax relief is: Highest age at any time during the tax year Limit Under 30 15% 30-39 20% 40-49 25% 50-54 30% 55-59 35% 60 and over 40% Notes: Contributions will also be relieved from the PRSI and the Health Levy, if you pay these charges. For tax purposes these contributions are limited to earnings up to a maximum of €254,000 in any year.

7. Company Pension Scheme (88,069 schemes with 726,405 members) (68.9% DB schemes and 31.1% DC schemes) (Fund assets in excess of €70 billion (estimate)) Personal Retirement Savings Accounts (PRSAs) (95,000 PRSAs with asset value of €835m - end Dec 2006) (80,463 employers had signed up with a PRSA provider ) Personal Pension Plans and Retirement Annuity Contracts (RACs) (In excess of 200,000 contracts – Irish Insurance Federation) Voluntary regime for supplementary pension provision Types of Irish Private Pensions

8. Company Pension Schemes Also known as Occupational Pension Schemes, sponsored by employers on behalf of employees In private sector, funded arrangement set up under trust so funds held separately from company assets In public sector usually ‘pay as you go’ unless commercial public sector Occupational Pension Schemes fall into 2 categories: 1. Defined Benefit 2. Defined Contribution Operation of schemes is regulated by Pensions Act and monitored by the Pensions Board

9. Occupational Pension Scheme Benefits Pension payable on retirement, usually 65, for your lifetime and taxed under PAYE Once-off tax free cash sum on retirement of up to 1½ final salary A pension may be payable to your spouse/dependants/children on your death, either before of after pension commences. A lump sum may be payable on your death either before or after your retirement A pension and/or lump sum may be payable if you retire in ill-health See PB Information Booklets ‘What are my Pension Options?’ and ‘Women and Pensions’

10. Personal Retirement Savings Accounts (PRSAs) For employees, self-employed, homemakers, carers, unemployed or any other category Contract between individual and PRSA provider – Investment account holding units in investments managed by approved PRSA provider Two types –Standard PRSA and Non-Standard PRSA Mandatory employer access Usual tax reliefs applicable Transfers to and from other pension arrangements are facilitated as far as possible Pension Board approves PRSA products and monitors activities of PRSA providers

11. PRSA Benefits In general can take retirement benefit anytime from 60-75 25% of fund as tax-free lump sum at retirement Number of options on how to use balance 1. Purchase annuity with life assurance company, or 2. Transfer value of assets to an Approved Retirement Fund (ARF) subject to meeting the qualifying conditions. Withdraw funds as required (taxed as PAYE), or

12. PRSA Benefits 3. Retain funds in PRSA and opt to draw income as required (taxed as PAYE). To avail of this option, a minimum of €63,500 must be used to purchase annuity or kept in PRSA until age 75 unless minimum income of €12,700 pa 4. On death before retirement – value of fund available as death benefit payable as lump sum or pension or combination of both 5. On death after retirement benefits payable depend on options chosen at time annuity purchased and if ARF in place.

13. Personal Pensions and Retirement Annuity Contracts (RACS) Self-employed or those in non-pensionable employment can take out a Personal Pension Plan aka Retirement Annuity Contract (RAC) Individual contract between individual and insurance company Can also effect a life assurance policy at some time to protect dependants These plans are not covered by Pensions Act but are regulated by Insurance Acts

14. Personal Pensions/RACs Benefits Options and benefits on death and on retirement much the same as PRSAs May not normally retire ‘till age 60 May retire at any stage in permanent ill-health See PB Information Booklets ‘What are my pensions options?’, ‘Women and Pensions’ and ‘PRSAs – a Consumer’s Guide’

15. Pension Adjustment Orders (PAOs) PAOs do not apply for judicial separations or foreign divorces; –if granted before 1/08/1996, –Irish divorces granted before 27/02/1997 –for non judicial separations i.e. separation by agreement. A PAO designates part of the pension benefits –to a non member spouse –or person representing a dependent child.

16. PAOs - continued Separate PAOs can be made in relation to; –retirement benefits (benefit payable to a member spouse) –and contingent benefits (e.g. Death in service benefits). PAO in relation to contingent benefits must be made with 12 months of judicial separation or divorce. General info on a spouse’s pension can be sought through the trustees of the pension scheme. Personal info will be given on your spouses consent and if no consent is given you may apply for a court order for info to be released.

17. PAOs - continued Court rules on 2 key factors – relevant period and relevant percentage. A ‘designated benefit’ is awarded and will commence at same time as member spouse unless an ‘independent benefit’ is requested, i.e. transfer of a designated benefit either within the scheme or to another scheme, to a bond, or a PRSA. Further info – see www.pensionsboard.ie and the Family Law and Women & Pensions bookletswww.pensionsboard.ie

18. –Only 61.8 % of the adult Irish workforce over 30 years of age –Only 58.3% of men in the Irish workforce –Only 50.6% of women in the Irish workforce Less than 25% of those working in –the agricultural industries including farming –working seasonal & part-time –working in the catering & tourism industries ….…have private pensions (Source: CSO Survey Dec 2006) The Facts

19. Consumer Research and Awareness Audits The key barriers to starting a pension for most people are: Can’t afford one house/holiday/car etc are the immediate priority Too young to start a pension Too complicated don’t understand pensions

20. Changing World We Live In We are Living Longer More Contract Work More Part Time Working Single Parent Households Smaller Families Separation Divorce

21. Changing Demographics 200620262056 No’s at Work 2,000,1002,268,0002,125,000 Aged over 65 464,000844,0001,532,000 No’s at work per person over 65 4.32.71.4

22. Employers Play your Part Access for all Employees –By law an employer must provide ALL employees with some form of access to a pension, whether they are in full-time, part-time, temporary, contract or casual employment. –All employers regardless of the size of their workforce are obliged to provide access to a Standard PRSA if those employees fall into the category of “excluded employees” (details available on the Board’s website).

23. National Pensions Action Campaign 2007 “Time for Action”

24. Overview NPAC 2003 – 2006 NPAC 2003 “Think about tomorrow. Today” Focused on awareness building. NPAC 2004 “You can’t hide from your financial future forever” Continued focus on Awareness building. NPAC 2005 “Action & Responsibility” Moved attention to taking action. NPAC 2006 “Action & Adequacy” Continued to focus on action and adequacy.

25. National Pensions Action Campaign 2007 Background and Objectives Background to 2007 Campaign The 2007 National Pensions Action Campaign message will be “Now is the time to take Pensions Action” CSO figures identify specific sectors with low levels of pension penetration - PR Strategy will focus on driving action in these specific sectors, particularly 25 – 35 year olds. Budget of € 1,000,000 is available for NPAC activity in 2007. The maturing of the majority of SSIAs during 2007 is a major opportunity to encourage greater take- up of pensions and to address pensions adequacy. NPAC Objectives 2007 The primary objective of the campaign in 2007 is to drive action by those with no pension and to ensure those with pension provision address the adequacy of that provision. A related objective is to encourage SSIA holders to make pension provision a priority this year.

26. National Pensions Action Campaign 2007 Key Target Sectors Population aged 25 – 35 years old – a key target for the Pensions Board, as it is critical that workers start their pension early in their working life in order to ensure they have adequate provision for their retirement Women – the female population has traditionally lower pension coverage than the male population and so is a key target sector for the Pensions Board Young People / Graduates – it is important that the pension’s message reaches people before they start their first job. Hospitality/Farming / Rural Community - The lowest levels of pensions coverage are in the Hospitality and Agri-sectors, which makes building positive pensions awareness within these communities a key target of NPAC 2007. International Workers – As more and more inward migration takes place in Ireland, a high percentage of the migrant workers do not have a pension.

27. National Pensions Action Campaign 2007 PR and Advertising Strategy NPAC 2007 proposes to engage in an intensive multi tiered messaging and media approach designed to drive action amongst the general public and the hard to reach sub-groups. This will involve a large advertising media spend over a short period to drive impact. Television is the strongest medium to communicate the message as it delivers high levels of coverage and ensures all age groups and social demographics are reached. Radio is the cost effective way of increasing the frequency of message and ensuring coverage of occasional television viewers. Ireland has the highest level of listenership to radio in Europe. Cinema will be used to ensure coverage of younger adults who tend to be “light" TV viewers. Press will be used as an informational medium in increasing the awareness of the importance for starting a pension. AmbientPosters on buses and in washrooms will be used in tandem with Internet banner advertising to target young consumers in the course of their daily routines.

28. Start your pension early a man retiring at 65 now can expect to live to 85 a woman retiring at 65 can expect to live to 88 ….that’s over 20 years in retirement !

29. We all have a responsible role to play in ….. ….actively promoting pensions take up !