Research published today by Hibernian Life & Pensions indicates that:
* 69% of all workers do not have a pension plan
* 75% of private sector workers do not have a pension
* 54% of workers are unaware of the tax benefits of pension savings
The research found that while four out of five adults say they have considered the age at which they would like to retire, few have considered how they will fund their retirement. The ideal age for retirement for almost half of those surveyed is 59.
Hibernian Life & Pensions head of pension development Martin O’Hora said: “The earlier people choose to retire, the less income buying power their retirement savings have. For example, at 60, a retirement fund of €100,000 buys an annual income of €5,340 but at 70 it buys €7,480”.
He said the irony of the research was that 39% of people who say they have no pension also admit to worrying on a weekly basis about their financial future.
“This is certainly not healthy,” he added.
Meanwhile, in its submission to the Pensions Board, under the National Pensions Review to be considered by Social Welfare Minister Seamus Brennan, the IAPF has come out against the extension of the current mandatory state pensions system.
IAPF chairman Joe Byrne argues that consumers are already paying mandatory contributions through PRSI for the State pension and that this should be supported by the making an incentive of additional pensions savings through appropriately targeted tax reliefs.
“We believe it is dangerous to focus solely on the issue of the numbers of individuals covered by pensions schemes and lose sight of the need for such individuals to accumulate an adequate level of retirement savings,” he said.
The IAPF believes that, in general, people should be aiming for a target pension of 50% of pre-retirement income. It argues that those on the basic wage could expect to get 50% of income upon retirement through the State pension.
Rather than mandatory pension savings, the IAPF argues that the lower paid should be given an incentive by allowing tax relief on pensions contributions at the top tax rate.