THE ESRI's major pension survey has confirmed what has been suspected for some time by pensions providers - that fewer than half of all workers in this country have any kind of pension provisions and that the self-employed, in particular, have made inadequate provisions.
The survey, which has taken over a year to prepare on behalf of the Department of Social Welfare and The Pensions Board, is the result of data gathered from 610 randomly selected companies (1,000 were requested to participate) representing various sectors and sizes, and 3.240 individuals (of 4,000 requested to participate). The purpose of the survey - the last one was done in 1985 - was to establish the number and percentage of employees, self-employed and those not gainfully occupied covered by an occupational or personal pension plan and the nature, scope and extent of the pension coverage provided".
The study found that the coverage rate for public employees - at 83 per cent - is very high but declines sharply for private employees with just 52 per cent cover and just 27 per cent for the self-employed and relatives assisting. It found that far more male employees (58 per cent) have a pension coverage than female (43 per cent) and that full-time workers (63 per cent) are more likely to have a pension than part-time or temporary workers (11 per cent).
The coverage figure for private sector employees with pensions has fallen from 54.4 per cent in 1985 to 52 per cent for 1995 and while the ESRI believes that more research is necessary to determine the cause, it is "consistent with the trend . . . in Britain and the US. Studies of the factors influencing coverage in these countries suggest that a number of factors including a shift towards jobs with lower pension coverage may have been responsible.
"Between 1988 (the earliest year for which data was available) and 1995 the number of regular full-time jobs increased by 8 per cent while at the same time the number of part-time jobs increased by 80 per cent and the number of occasional jobs increased by nearly 76 per cent. In addition the number of jobs held by women increased by over 31 per cent and the number of jobs held by men only increased by 6 per cent. Since female employment and part-time and occasional employment are all positively correlated with lower pension coverage, their increase could have led to a fall in pension coverage.
Other features of pension coverage have changed since 1985: the majority of pension schemes still require that members are full-time employees, but this percentage has dropped from 90 per cent to about 75 per cent in the 10 years. The normal age at which members can retire is now, on average, 62, down from the 1985 average age of 64.
This latest survey also determines the average contribution made in 1995 by the self-employed and their relatives assisting. The average annual contribution by non-agricultural self-employed persons was £2,460 or 10.1 per cent of annual gross income, and £1,254 by agricultural self-employed (i.e. farmers) or 6.1 per cent. The total average annual contribution for the self-employed sector (including relatives assisting) was £2,214 or 9.5 per cent of annual gross income.
The age profile of self-employed people when they first took out their pension also makes interesting reading: despite the importance of making pension provisions as early as possible, the study shows that nearly half of all the self-employed (about 45 per cent) fail to start pension contributions until age 45 or over. The study also breaks down the level of retirement provision of any kind by the two self-employed sectors and discovers that 48.9 per cent of the non-agricultural self-employed and 82.3 per cent of farmers have failed to make any kind of pension or other investment provision.
The survey also tackles the issue of the pension provisions of people who are not currently working, who include the unemployed, the retired, persons engaged in home duties (i.e. primarily women) and other who are not economically active.
It found that of the nearly 1.5 million people aged over 15 who are not working, only a little over 12 per cent have ever belonged to an occupational pension scheme and half of those are the retired.
The structure of occupational pension schemes, by sector, number of employees, when they were set up, etc. is all carefully detailed by the survey. In keeping with other reports, it shows that an increasing number of workers (8 per cent of the total) are now members of defined contribution rather than defined benefit schemes. Part-time workers are also more likely to be members of defined contribution plans.
The main finding of this important report - that over half of all workers have no pension provisions other than state benefits - has prompted the Minister for Social Welfare to set up a National Pensions Initiative "to promote debate on the issue and lead to properly researched proposals and options on the best way forward." Consultants have been hired to put together the Consultation Document by January 1997 after which any interested parties will be invited to make a submission.
Behind the Minister's initiative, of course, is the spectre of an ageing population and the prospect of fewer, younger taxpayers to meet the cost of future State pension commitments. One solution, which is gaining considerable support within the pensions industry here and in Britain, and which the National Pensions Initiative can expect to hear about, will be that occupational and self-employed pension provisions be made compulsory. releasing the State to support only the very neediest.
The Occupational and Personal Pension Coverage 1995 Survey is available from the Economic and Social Research Institute, 4 Burlington Road, Dublin 4, Price £12, (Students - £6).
