Bank sounds warning on pensions

ONLY one quarter of Irish people think they are saving enough to be comfortable when they retire, according to research published yesterday by Bank of Ireland.

The bank said the number of people with their own pensions was “alarmingly low” and blamed strict rules governing the sale of pensions and poor awareness of the need to plan for retirement.

The bank’s survey found 22% of people felt they were too young to start their own pension, while 30% said they would rely on the State pension, which is currently less than €170 per week. The average age of people taking out a new Personal Retirement Savings Account (PRSA) was 36. PRSAs were launched last year as part of a government-sponsored drive to improve the take-up of private pensions.

David Swanton, marketing director with the bank’s life and pensions arm, said people who were not part of a pension scheme needed to set up PRSAs as early in their working lives as possible.

Mr Swanton said starting contributions at 36 meant an individual’s pension fund had missed out on at least 10 years’ contributions and had also foregone opportunities for significant investment growth.

“It is never too early to plan for your future. I would call on anyone who does not yet have a pension plan in place to consider how they plan to survive financially once they reach retirement age,” said Mr Swanton.

The bank called for an easing of the requirements governing the sale of pensions. Mr Swanton said the PRSA sales process involved considerable paperwork. Any moves to streamline the process and make it more customer-friendly would be welcome, he said.

The bank also said publicity campaigns and reforms in the industry had failed so far to make the necessary impact in improving pensions awareness.

Almost half of people surveyed felt they did not fully understand PRSAs.

The government-funded Pensions Board, which has been charged with improving PRSA awareness, has spent over €500,000 on publicity campaigns.

“The research shows that there are some worrying trends in terms of attitudes to pension provision and a clear knowledge gap around PRSAs,” said Mr Swanton.