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Over 40% of Irish workers will be reliant on state supports when they retire

06/01/2020 Posted by IAPF | Comments(0)

More than 40% of Irish workers have no private pension and will be entirely reliant on state supports when they retire.

Statistics issued by the Central Statistics Office (CSO) also show that people tend to leave it late to start contributing to their pension fund, with pension coverage lowest among younger workers.

The 2019 Pension Survey shows a slight increase in the numbers making provision for their retirement, with supplementary pension coverage increasing by 3% in the last 12 months.

However, the survey has found that huge parts of Irish society could be left entirely reliant on state supports when they retire. Among the findings are:

  • Just six-out-of-ten workers aged 20-69 have supplementary pension coverage. This includes occupational pension coverage from current or previous employment.
  • Pension coverage remains lowest among younger workers. More than four-fifths of workers aged 20-24 do not have a pension. Just 44.8% of 25-34-year-olds report having a pension.
  • Pension coverage is greatest among workers aged 45-54, where it is 71.8%.
  • Over half (51.0%) of self-employed persons have pension coverage. Almost a third (32.7%) of workers with personal pension provision have deferred payments for a period of time.

The survey also asked those who do not have supplementary coverage why they don't. One-third of respondents said they can't afford it and 36% said they never got around to organising it.

Some 60% of those who don't have a pension expect to rely entirely on the state pension in retirement.

From next year, the pension will not be payable until people reach the age of 67.

The Government has plans to introduce auto-enrolment in workplace pension schemes from 2022, which should address the issue of people who simply fail to get around to setting up a pension.

Jerry Moriarty, CEO of the Irish Association of Pension Funds, said the figures make for worrying reading in the context of Ireland's ageing population.

"The 2016 Census report shows that there are now 296,837 males and 340,730 females aged 65 or older in Ireland.

Those numbers are set to grow substantially over the next 10-15 years driving up the cost of retirement provision to the State," he said.

If the levels of private and individual pension provision remain as low as they are now, the Government will come under pressure to do more for pensioners as the current State Pension is set at a level to just keep people out of poverty.

"And, with the growing numbers of people receiving this, it will be difficult to even sustain it."

He warned younger workers, where participation is lowest, to start saving when their disposable income is at its highest.

Read the original article here

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