Comment: Age Action Ireland has the goal "to make Ireland the best place in which to grow old". We can be glad that we're fortunate enough to be living in a state where the Government recognises the need to tackle pension coverage a good 50 years in advance of the pension time-bomb explosion.

The Pensions Board forecasts that there will be just 1.4 workers to fund each pension in 2056 - a stark contrast to the 4.3 working people funding today's pensioner. In a healthy economy like Ireland's, there should be no reason why this goal cannot be achieved.

However, if we are all to rely on the State contributory pension of €193 per week, one can't imagine that one would feel like Ireland was the best place to grow old. So why are many of our current pensioners on the poverty line?

The answer is straightforward - a lack of personal retirement savings. The latest Quarterly National Household Survey revealed not only that our working population has a distinct lack of pension cover but that, despite the reported increased awareness, our pensions coverage has actually fallen to 51.5 per cent since the previous survey in 2004.

Entering into your "golden years" without a decent income is a daunting prospect. The results of the most recent survey* on the subject of old-age poverty indicated that 36 per cent of persons aged 65 and over are living on incomes less than 60 per cent of the national average wage. And this is after social transfers like pensions are included in their income.

So why are we, as a nation, not saving for our retirement? The answer is twofold:

A perception that retirement and pensions are for old people instead of a stage in life that we should all look forward to and plan for as soon as we start working;

We don't understand the tax advantages of saving for our golden years.

Our latest research •• shows that a shocking 71 per cent of the population don't understand the tax relief available to them on pension contributions.

Bank of Ireland Life approached the Government on this very subject over a year ago with a proposal to revamp the current PRSA model to one that was easier to understand, more flexible - with some access to cash before retirement and a simple account opening process.

The proposal was reviewed, but unfortunately it was not implemented. A key opportunity to make real inroads into the pensions crisis as the SSIAs start to mature has been missed.

If a tax bonus instead of tax relief were applied to pension contributions, the attraction of the retirement savings vehicle would be more clearly understood and people might divert some of their monthly SSIA con- tribution to a PRSA. Our experience shows that about half of those whose SSIA has already matured are electing not to continue saving despite Bank of Ireland research findings that that monthly SSIA saving was not a significant financial burden for over 80 per cent of SSIA savers.

Unfortunately, for half of SSIA savers who decide not to keep up the savings habit, monthly SSIA payment will soon be re-absorbed back into their monthly outgoings and a massive opportunity lost for encouraging retirement savings.

If we could have offered these savers, many of them saving regularly for the first time in their life, a seamless, transparent transfer to pension with a more attractive tax bonus than their SSIA - 25 per cent for the standard rate tax payer and 48 per cent for the higher rate worker, our looming pensions crisis could have looked very different.

So what now for the Government? The latest National Pension Review completed a technical review of the most appropriate and practical system of mandatory pension, for the Government to consider. The model in the report recommends a combination of an increase in the State pension with a mandatory supplementary system for those who are not already making provision for their own retirement.

For those without a pension in place, 15 per cent of their income of €15,000-€60,000 would be taken through the compulsory system. A third would be paid by the Exchequer with the balance split in some way between employee and employer.

The biggest concern in relation to this proposal is adequacy, or rather the lack of it. Will the minimum contribution become the maximum as it has already done with Australia's mandatory pension scheme? And will the employer, who seems to play a role in this proposal - be capable of paying as much as 5 per cent of salary into their employees' pension funds, especially in the case of a small or start-up company?

A recent report* estimated that Ireland would have 21,000 new business start-ups by the end of this year alone - we can suspect our entrepreneurial spirit will be hindered somewhat by the additional expense of this mandatory pension system.

There is also a risk that with increasing pressure on Irish companies to be competitive in global markets, despite the significant growth in business costs could result in a salary freeze, or job losses.

The merits of moving towards a system of mandatory pensions at the moment remain to be seen. However, they should not be ruled out completely and we must accept that it may become necessary at some stage in the future.

To be frank though, there are many more options to be explored before compulsory pensions should be even considered.

• 2003 EU Survey on Income and Living Conditions

•• Bank of Ireland Life Pensions research 2006

Brian Forrester is managing director of Bank of Ireland Life