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DUBLIN, Ireland-Two new laws that went into effect this year may radically alter employer-sponsored retirement plans, benefit experts say.
The Pensions Act 2002 and the Finance Act 2002 contain provisions that, among other things, introduce a new type of personal savings account, increase the amounts that workers can contribute to their plans and speed up vesting.
"Of the changes that were made in the Pensions Act, the most significant was the introduction of the Personal Retirement Savings Account," said Paul Kenny, a consultant at Mercer Human Resource Consulting in Dublin.
The PRSA is very much like the stakeholder pension in the United Kingdom, Mr. Kenny said. U.K. employers with five employees or more must offer their staff access to at least a low-cost stakeholder pension plan, which is funded by employee contributions. As with stakeholder pensions, employer contributions to PRSAs are voluntary.
Employers in Ireland must offer a PRSA to all newly hired workers within six months, Mr. Kenny said. In addition, employers sponsoring pension plans that do not offer employees the opportunity to make additional voluntary contributions "will have to offer a PRSA facility alongside the occupational pension scheme," he said. "PRSAs will go hand-in-hand with pension schemes as if they were AVC arrangements," he noted.
"Because of its wider application, I think PRSA will be more significant in Ireland than stakeholder has been in the U.K.," said Michael Parker, a consultant at Towers Perrin in St. Albans, England. He said that the new PRSA was a "reasonably priced,...