Mercer presses pensions case

Employee benefits consultant Mercer has called on the Minister for Finance to take steps to encourage the continued provision of defined-benefit pension schemes. It is also pressing for the removal of a "penal tax regime" on pension provision for unmarried couples.

In a pre-Budget submission, Mercer says Mr Cowen should allow employers to offset their contributions to a defined-benefit scheme against salary for the purposes of assessing PRSI liability.

Senior consultant Ms Joyce Brennan said increasing costs have seen many employers close defined-benefit schemes.

"We believe this incentive is urgently required to relieve the immense pressure on defined-benefit pension schemes," she said.

Mercer estimates that around 10 per cent of Irish defined-benefit schemes are closed to new entrants, a figure that has doubled in less than a year.

Mercer's call comes as pensions expert Mr Alan Pickering said final salary defined-benefit schemes had become "a risk too far for employers".

The chairman of the European Federation for Retirement Provision, who addressed an international pensions conference in Dublin on Monday, said the future of defined-benefit schemes lay in "other forms of risk sharing which reduce the volatility for employers - such as defined-benefits schemes based on career earnings rather than final salary".

Mercer also called for an end to the situation that sees unmarried people facing inheritance tax on the value of a partner's pension that provides for them after the member's death.

On top of income tax payable on the pension as they subsequently receive it, this amounted to double taxation, said Ms Brennan.