Employers who do not contribute to their employees' Personal Retirement Savings Accounts (PRSAs) are making a profit of more than €300 per contributing employee per annum, based on average contributions to the new pensions.
According to Irish Life, average contributions to PRSAs are around €3,040 per annum.
Employers do not have to pay employer PRSI on the sums their employees contribute, meaning they save 10.75 per cent on each contribution, or about €326.80 on average per year, based on the Irish Life figures.
The company, which claims a 30 per cent share of the PRSA market, is calling on employers to pass on their employer PRSI savings, arguing that employers can contribute roughly one eighth of their employees' contribution at little cost.
The life and pensions company said that if employers add €25 to every €200 contributed by an employee, they will receive corporation tax relief at a rate of 12.5 per cent on their contribution, or €3.13 per month, as well as employer PRSI relief on the employee contribution, or a further €21.50 per month saving.
The net cost to the employer of adding €25 to an employee's €200 per month contribution is, therefore, only 37 cents per month.
At Irish Life, around half of employers are contributing some money to their employees' PRSAs.
However, Ms Dervla Tomlin, head of marketing at the company, said she believed this rate of contribution was above the industry average.
The Pensions Board, the statutory body regulating pension schemes and PRSAs, has no figures on the number of employers who are contributing to their employees' PRSAs.
However, it plans to monitor the number during 2005. At the end of September 2004, some 37,086 PRSA contracts had been sold. More than 18,000 of these were taken out through an employer.
Almost 66,500 employers had appointed PRSA providers in compliance with the law by this date.
However, at more than 60,000 of these firms, there were no employees contributing.
The Pensions Board is concerned by the number of "empty shell" PRSAs and it is thought that employers' contributions would provide a greater incentive to employees to take out a PRSA.
At the request of the former Minister for Social and Family Affairs, Ms Coughlan, the Pensions Board has prepared a report examining a proposal that employers be required to contribute their PRSI savings to employees' pensions.
The report was sent to the Department of Social and Family Affairs last September and the Pensions Board is awaiting a response from the new Minister, Mr Brennan.
