1. Presentation to Pensions Forum Making Pensions Compelling not Compulsory Friday 5 May 2006 David Went Group Chief Executive - Irish Life & Permanent

2. Why am I here ? zIrish Life has been selling pensions for over 65 years zWe are Ireland’s largest and most experienced pension provider zWe pay more people their pension than anyone other than the State zWe manage over €18.4 billion in pension funds zThere are nearly 200,000 individuals currently saving for their retirement with Irish Life

3. Why am I here ? zWe are one of the few companies who have made a success of PRSAs yWe targeted individuals both directly and through their employers yWe provide a one-to-one advice service zPRSAs have brought us to a new type of pension customer, typically yAge 35 yEarning €30,000 a year ysaving €250 a month zWe have gained an insight into what makes these customers take out a pension and what discourages them

4. What is State’s responsibility ? Well Off - Able to look after themselves Low paid/non-earners - State obligation to provide for - Covered with improved State Pension Average Earners - State obligation to avoid poverty - State obligation to encourage income replacement

5. And looking closer ? Coverage lowest amongst ySelf employed yEmployees of smaller companies yThose with irregular work patterns yMore vulnerable workers

6. How do we increase coverage where needed ? zNational strategy is to supplement state pension with voluntary private provision zDevelopments required to simplify voluntary system have been identified zMandatory Private Pensions have now entered the debate as other jurisdictions experiment with it

7. Issues with Mandatory Private Pensions zAdds to cost of employment zDoes the employee ultimately pay anyway ? zImpact on pension adequacy zInvestment risk zAdditional regulations and administrative overheads zEnforcement difficult in target sectors zWe’ve tried compulsory scheme in Construction Industry zWe already have a mandatory pension - PRSI

8. If not Mandatory then what ? zImproved State Pension for low earners zSupplemented with voluntary provision zSSIAs were the most successful savings model ever … learn from this ! zThe success of SSIAs can be attributed to yThe simplicity of the concept yThe immediacy of the incentive yThe reasonable access rules yThe ease of purchase

9. Follow through with current strategy zNPPI report 1998 - make it easier for individuals to take out a pension yIntroduce simple portable pension ySimplify the tax system yRegulatory regime suitable to ‘new environment’ zNational Pensions Review made recommendations based on new learnings from SSIAs yTake incentive out of tax system - contribution matching yUse incentive to target lower paid yAllow early access to portion of funds zIrish Life strongly advocate implementation of these initiatives yMarket research conducted - November 2005 ? ?

10. CLAIMED TO UNDERSTAND CURRENT TAX TREATMENT OF PENSIONS Private sector workers, ages 30 - 50, no pension Totally Largely To some extent Not really Not at all Don’t Know Source: Behaviour & Attitudes Market Research November 2005

11. LIKELIHOOD OF TAKING OUT A PRIVATE PENSION IN NEXT YEAR Private sector workers, ages 30 - 50, no pension Extremely likely – plan to do so Very likely – hope to do so Somewhat likely – may do so Not very likely Not at all likely Don’t Know At start of Interview If mechanism operated similarly to SSIA’s with Gov. top ups each month & not tax relief (€1 top up for every €2 saved) (€1 top up for every €1 saved) Source: Behaviour & Attitudes Market Research November 2005

12. Extremely likely – plan to do so Very likely – hope to do so Somewhat likely – may do so Not very likely Not at all likely Don’t Know At start of Interview If mechanism operated similarly to SSIA’s with Gov. top ups each month & not tax relief (€1 top up for every €2 saved) (€1 top up for every €1 saved) Source: Behaviour & Attitudes Market Research November 2005 LIKELIHOOD OF TAKING OUT A PRIVATE PENSION IN NEXT YEAR Private sector workers, ages 30 - 50, no pension

13. Extremely likely – plan to do so Very likely – hope to do so Somewhat likely – may do so Not very likely Not at all likely Don’t Know At start of Interview If mechanism operated similarly to SSIA’s with Gov. top ups each month & not tax relief (€1 top up for every €2 saved) (€1 top up for every €1 saved) Source: Behaviour & Attitudes Market Research November 2005 LIKELIHOOD OF TAKING OUT A PRIVATE PENSION IN NEXT YEAR Private sector workers, ages 30 - 50, no pension

14. Extremely likely – plan to do so Very likely – hope to do so Somewhat likely – may do so Not very likely Not at all likely Don’t Know At start of Interview If able to cash 30% at 45 and further 20% at 65 (versus 25% currently) Source: Behaviour & Attitudes Market Research November 2005

15. Why we need to implement Review recommendations zRe-packaging tax benefits increases marketability yCan be cost neutral to exchequer zIncreased incentives can be targeted at lower earners yMatching contributions €1 for €1 up to relatively low ceiling yMatching €250 pm for a 40 year old would give pension of 32% of average earnings at 65 (on top of the State pension) yIncreases to 35% if combined with €7,500 SSIA transfer scheme zEarly access to funds combines saving and retirement planning needs yCost neutral to exchequer zRadical review of regulatory Infrastructure yMake pensions as easy to take out as SSIAs were

16. Summary zWe are lucky because we are different yWe have time to get it right yWe have already created a savings habit zLearn our lessons from the success of SSIAs zWe have a strategy of State pension supplemented with voluntary provision - too soon to abandon it zBefore we adopt a mandatory private system - let other countries road test it for us zIt takes courage to see through all aspects of the strategy