Pension confidence 'very hard to justify'

Two-thirds of Irish pension scheme members have no idea about the current value of their pension.

However, 82 per cent of those in work believe they will be at least as well off as their parents in retirement, according to a survey conducted for Standard Life by Millward Brown IMS.

"It is very hard to justify such confidence as just 19 per cent of those with some form of pension were in a defined benefit scheme," said Standard Life chief executive Mr Michael Leahy.

Details of the study of 946 people, one of the largest conducted into pensions in Ireland, emerge as the Irish Association of Pension Funds hosts a pensions and investment conference that is expected to call for measures to address the pensions shortfall , including a rise in the retirement age. It follows last week's publication of the Turner Report on pension provision in Britain.

The survey found that 57.3 per cent of respondents had pensions - a figure broadly in line with CSO figures. However, more than a third (36 per cent) did not even know if their own pension was defined benefit (which pays a set percentage of final salary in retirement) or defined contribution (where the pension is determined by the performance of the investments made with contributions).

The bulk of pension holders (67 per cent) say they started planning for retirement before the age of 35 but almost half of those in defined contribution schemes are contributing 5 per cent of their income or less and a further 19 per cent do not know how much they are putting in.

"The survey suggests that some Irish pension holders would benefit from a major wake-up call," said Mr Leahy. "Many are sleepwalking into retirement poverty unless they take more interest in their pension." He said the complacency may be due to people mistakenly believing they are covered by a defined benefit scheme.

Pension experts estimate that, even at 18, working people should be contributing in excess of 10 per cent of income to their defined contribution pension in order to retire on roughly two-thirds of their final salary.

More than two-thirds of respondents with a pension plan (68 per cent) would like to retire before 65, while almost a half (47 per cent) expect to do so.

The majority (56 per cent) are against increasing the retirement age above 65 even if the State was to pay a higher pension.