IRELAND – The newly launched Special Savings Incentive Accounts (SSIA) and a lack of public awareness towards pension funds could hamper the success of Ireland’s new pensions bill, says Watson Wyatt, the international consultancy firm.

The recently published Pensions Bill paves the way for the introduction of Personal Retirement Savings Accounts (PRSA) and a pensions ombudsman. The PRSAs are designed to offer the public a relatively simple, accessible and flexible means of saving for their retirement, including a limited charging structure imposed by PRSA providers. Ultimately, the all-embracing PRSA will replace, additional voluntary contributions plans, personal pensions and transferplans, simplifying the pensions marketplace.

Says Gerry O’Carroll, a partner at Watson Wyatt: “Despite their obvious attraction, PRSAs may suffer initially as a consequence of people being tied into shorter term savings under the terms of the SSIAs.” But O’Carroll doesn’t think that there will be any long term problems. “The effect of SSIAs is likely to be temporary.”

The new legislation will open the door for providers other than life insurance companies to penetrate the market. Watson Wyatt believes it will be interesting to see who decides to get involved and what new concepts they will bring to the market.

Global consultancy firm, Mercer, says that while the bill is one of the most extensive pieces of legislation to be introduced by the current government, the areas covered in it contain no real surprises.

The Irish Association of Pension Funds (IAPF) also welcomes the new PFSA concept, saying it will “provide the mechanism for enhancing pension coverage by offering a low-cost flexible and more understandable vehicle for retirement provision”, but was particularly keen to see the proposal to introduce a pensions ombudsman.

IAPF chairman John Feely comments: “The IAPF fully supports the creation of this post as there is a clear need for a forum to resolve disputes.”

The ombudsman will be appointed by the department for social, community and family affairs and will have the power to investigate any complaint made by a beneficiary for financial loss by any person managing an occupational pension plan or PRSA.

Says Mercer : “The growth in the number and size of occupational pension plans has led to an almost inevitable increase in the number of complaints relating to pensions. A concern would be that there would be further increases in this number by virtue of the existence of an ombudsman, although the requirement for trustees to have an internal dispute mechanism will ensure that minor grievances don’t make their way to the ombudsman.”

Mercer also believes that the fact the ombudsman will be funded by the Exchequer, Ireland’s finance minister, enhances the independence of the new office.

Watson Wyatt’s O’ Carroll says that the ombudsman will “mainly help sharpen the focus on scheme administration” but that employers and trustees that observe current best practice “will have little cause for concern.”