More than a third of all working adults don’t have a pension, with 61 per cent pointing out that lack of spare money is the main reason for not having one. Some 40 per cent of those who have no pension, plan to start saving in one-to-five years but, equally, the same number also feel it is too late to start saving for retirement at this stage in their lives. In addition, 71 per cent don’t have a financial advisor or broker to discuss financial planning with*.
These stark findings are revealed in Zurich’s latest research into pensions in Ireland. The comprehensive research study also throws a spotlight on the concerns many people have about their future and how they will maintain their standard of living when they retire.
Almost every third worker is very or extremely concerned about having enough money for retirement and most feel the sooner one starts saving into a pension fund, the better. Of those surveyed, 81 per cent said that a person should be no later than in their 30s when they start saving, but almost half of all respondents think the best age to start saving for retirement is in your 20s.
Commenting on the research, Jonathan Daly, head of retail distribution and propositions at Zurich Life says; "The findings of this year's pension research show that there is a serious shortfall in the number of working adults who have or plan to start a pension. While some people are happy to rely on the State pension, they really need to ask themselves will this be enough to live off in retirement, and will this be sustainable in 10, 20 or 30 years' time."
Daly adds; “Early planning and consistent pension saving are the best ways to prepare for retirement. For some, retirement might seem a long way off, but the sooner you start saving the better. You can build up your pension pot gradually over a number of years, and add to it when you have spare money.”
Zurich’s pension study reports that nearly half of all working adults who don’t have a pension, think it is too late to start saving for retirement at this stage in their lives. Unsurprisingly, the majority of people who think this are in the 55+ age category. In contrast, 36 per cent feel the time is just right to start saving for retirement, and the majority of people who expressed this view are 18-34 year-olds.
"This is a worrying fact," Daly says. "With longer life expectancy and an ageing population we need to seriously consider the impact on the cost of supporting the retired population, and how the State pension will sustain those in retirement for a longer period of time."
Currently, the State pension in Ireland is €243.30 weekly**. Of those surveyed for Zurich’s pension research, 27 per cent said the annual income guaranteeing a normal life in retirement should be in the region of €20k-30k. However, for all those aged over 55, they stated that the income needed in retirement should be more than €40k per annum. More than seven in 10 of all working adults who contribute to their pension each month would like to be able to save even more.
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When it comes to understanding how pension savings are invested, 58 per cent said they are not familiar with how pensions are invested – and this was more pronounced among the younger demographic of those surveyed.
When asked if you would be more inclined to start a pension if you could access your money before retirement in certain circumstances (eg to pay for a house deposit or in case of redundancy), seven in 10 said that providing access to funds before retirement would be a motivating factor for starting a pension.
In addition, almost half of those surveyed were not aware that part of their pension funds can be taken tax-free upon retirement.
*Source: Zurich Pension Survey 2018
**Source: Department of Employment Affairs and Social Protection