Perks advised for some savers to invest in pension

SSIAs: The SSIA-holders who have made least provision for their pension should be offered incentives to roll over the proceeds…

SSIAs:The SSIA-holders who have made least provision for their pension should be offered incentives to roll over the proceeds of their accounts into a retirement fund, the report recommends.

It stops short of recommending that all of the Republic's 1.2 million SSIA holders should benefit financially from switching their savings into a pension.

The board said that account-holders who have not fully used their pension contribution allowances or who are not entitled to income tax relief should be encouraged to make pension provisions. It believes these individuals will respond well to these incentives.

In the report, the board has recommended the introduction of a once-off increase in pension contribution limits for those who had not fully used their pension contribution allowances in the recent past.

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It also states that SSIA holders who are not claiming income tax relief should be exempt from paying an exit tax when their accounts mature when the funds are transferred into a pension.

Almost €15 billion in cash is expected to be released into the economy when the SSIAs begin to mature between May 2006 and April 2007. About €5 billion is due to be paid out to SSIA holders in 2006 with the remaining up to €10 billion scheduled to be released in 2007.

Goodbody Stockbrokers has suggested that the average payout to account holders will be €13,800.

It said a significant number of the 1.2 million SSIA account-holders had upped their monthly contributions to the maximum €254 in recent months.

The board said it recognised that the maturing of SSIAs was a once-off opportunity to engage a large number of people in pension savings.

In making its recommendations, it considered waiving of an exit tax, the waiving of pension contribution limits for a set period and possibly subject to conditions.