The number of people in their mid-40s and 50s with a private pension has fallen significantly since last year with the cost-of-living crisis putting future planning out of reach for many, according to research from the State’s consumer watchdog.
A Competition and Consumer Protection Commission survey, published today, highlights what it described as “concerning gaps” in retirement planning.
While 90 per cent of people between 45 and 64 have a pension plan in place, the numbers aged between 45 and 54 with a financial plan for their future has fallen from 85 per cent to 76 per cent since last year.
The commission’s research also suggests that one in four of those with no pension say they cannot afford it, with the issue of pension inadequacy being exacerbated by the increased cost of living and decreased home ownership.
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The study also points to a majority who hope to use cash savings to fund their retirement, with the watchdog voicing concern about the impact high inflation and low rates of interest on deposits would have on such plans.
Some 57 per cent of respondents said they would use cash savings to support their retirement, but the commission noted that pensions are long-term investments with contributions subject to tax relief, which means money invested in them goes further than that put into savings.
Across all age groups, 64 per cent have a pension with younger people far less likely to have made plans for their future.
The reluctance of the under-40s to set money aside for a pension prompted the Government to announce plans for a landmark auto-enrolment scheme. This would see most workers signed up to a pension scheme by default, though they can opt out.
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The scheme was due to begin early next year but questions have been raised about whether it would be ready by then. Minister for Social Protection Heather Humphreys last month confirmed the target date for starting the scheme has started to slip, with the second half of next year now more likely.
The commission’s research points to strong support for the scheme, with 79 per cent of under-25s telling researchers they would be happy to pay into a compulsory pension scheme. Women are more likely than men to opt in, with only 16 per cent saying they would opt out.
Commission spokeswoman Grainne Griffin said it was “concerning that such a significant cohort of people could enter retirement without a pension”, but said it was “understandable” that some younger people might choose to delay starting a pension with living costs having risen.
Ms Griffin warned people against viewing a pension “as a box to tick and forget about – you need to make sure your pension is enough to fund the retirement you want”.
