Fewer than half of skilled workers pay into a private pension, new figures show 

Of the workers without a pension, six in 10 said they planned to rely on the State pension only when they retired. Picture: PA

Fewer than half of skilled workers and tradespeople pay into a pension, while only one in five workers without a pension are aware of the new Government scheme that will automatically put them on one.

New statistics from the Central Statistics Office show more than two-thirds of workers (68%) have some form of pension cover outside of the State pension, with those whose occupation is classed as “professionals” having the highest pension coverage, at 83%.

Over two-thirds of workers have some form of pension cover outside of State Pensionhttps://t.co/zn9lvOwHi2#CSOIreland #Ireland #Pensions #PensionCoverage #Earnings #Employment pic.twitter.com/iplMzsO4Zs

— Central Statistics Office Ireland (@CSOIreland) February 26, 2024

For those without a pension, more than four in 10 cited affordability as the main reason for not having it while a similar proportion said they had either not got around to organising it or would do so at a later date.

Of the workers without a pension, six in 10 said they planned to rely on the State pension only when they retired.

Glenn Gaughran, head of business development at the Independent Trustee Company, said “far too many people are relying, and expecting to rely” on the State pension in retirement.

“The full State pension is currently up to €277.30 a week for those aged between 66 and 79,” he said. 

Having to get by on €277.30 a week could be a huge financial shock to many people — and there will be people who simply won’t be able to make ends meet in retirement on that kind of money.

Royal London Ireland pension proposition lead Mark Reilly said given people are now buying homes later in life, they could be set for a financial shock when they retire if they are not adequately prepared.

“The median age of a house buyer is now 39 — up from 35 in 2010,” he said. 

“This means that more people are likely to see mortgage debt follow them into their retirement years and in turn eat into their retirement income.

“It is imperative that private pension coverage in Ireland is improved — otherwise, a significant portion of the population could struggle financially when they reach retirement.” 

Automatic enrolment is a key initiative from the Government ,whereby all workers not paying into a pension, aged between 23 and 60 and earning over €20,000, will be automatically enrolled onto a pension scheme.

The CSO found just 18% of workers not on a pension were aware of the scheme but most who were (72%) said they would stay in the scheme if automatically enrolled.

It is due to begin its rollout in the fourth quarter of this year, although industry figures have suggested this could be delayed.

“It is important that this start date is not pushed back any further,” Mr Gaughran said. 

“If the Government is serious about increasing private pension coverage in this country, auto-enrolment must be rolled out sooner rather than later.” 

Last week, Social Protection Minister Heather Humphreys said the Automatic Enrolment Retirement Savings System Bill is expected to be published in the coming weeks. Passing this legislation will be a “major milestone”, she said.

“While there remains much to be done in this ambitious project, considerable progress is being made on multiple workstreams,” she added.