Just 50% of workers have a pension

IRELAND’S pension time bomb continues to tick with latest figures revealing just one in two workers have a pension.

According to the latest national quarterly household survey issued by the Central Statistics Office (CSO) for the last quarter of 2009, the number of workers with a pension across all age groups had slumped to 51%. This is a drop from 56% for the same period in 2005.

Pension coverage continues to remain lowest among young workers with just one in every five workers (19%) aged between 20 and 24 having a pension.

This compares with three of every five workers aged between 45 and 54.

The most common reason for not having a pension, cited by 33% of workers, was the inability to afford monthly payments.

Just over one-fifth (21%) of those without a pension said they “never got around” to it while 11% did not identify a reason.

Director and head of investments with IFG Corporate Pensions Samantha McConnell said the most worrying feature of the figures was that they showed a drop across all age groups for a period before the recent reduction in tax relief on pensions.

“The worrying aspect of the figures is that they show a reduction in coverage across the board and these figures are before the reduction in tax relief last year.

“What’s interesting is that it’s across the board. That is frightening because it doesn’t seem to matter whether you’re old, young or in middle age. The coverage or the number of people with a pension scheme has reduced.”

Ms McConnell also expressed concern at the increase in the number of workers who expect to rely on the state social welfare old-age pension from 20% to 26% between 2005 and the last quarter of 2009.

“The other interesting thing is the number of people who said they will depend on the social welfare old-age pension increased. That’s worrying in a situation where that pension may not be there by the time they come to retirement,” she said.

The Government has yet to reveal its proposals to address the pensions time bomb. Fine Gael are in favour of a reduction in tax relief while Labour are pushing for a pension levy.

However, according to Ms McConnell, either option would have negative consequences.

“Whether you go with a reduction in tax relief or whether you go with a levy, it’s effectively death by a thousand cuts.

“The thing we would say is do not touch tax relief on pensions any further because if you do that then the pensions time bomb will explode. It may not explode in the next four or five years but it will explode and explode big time,” she said.