BY JOHN ELLIS, FINANCIAL ADVISOR
Pensions Awareness Week (PAW22) will take place from September 19 to 23. It is designed to raise awareness about retirement planning. As there have been some dramatic changes in financial markets and the world in the recent past and the continuing uncertainty, it’s time to look at what it means for investments and pensions.
Guest speakers will be on hand with experts from the Pensions Authority including former pensions ombudsman Paul Kenny. Some of the participating companies include Aviva, Irish Life, Royal London Ireland, Zurich Life, Lidl, Davy, the ISME Association, the Pension Authority, the Retirement Planning Council of Ireland, Life Insurance Association of Ireland, Brightwater Recruitment Specialists, the Irish Association of Pension Funds, Insurance Ireland, Parents and Brands, and Moneycube.ie.
While the session on Building the Employee Value Proposition is the only in-person event, virtual sessions will cover pension-related topics such as Financial Wellbeing for Women, Starting a Pension, Keeping Your Pension on Track, Approaching Retirement and Pensions & Benefits for Business Leaders.
The launch of PAW22 comes on foot of a new survey from ParentsandBrands.ie. which reveals that 60% of people are failing to save for retirement on a regular basis, a figure which could rise further in light of the current cost-of-living crisis.
Ralph Benson, founder of PAW, says: “It is a striking statistic that 60% are failing to make regular savings towards their retirement and it’s clear that people need to take active steps to make sure they can continue to live comfortably into their old age.
“We want people to do the right thing with their money, which is why Pensions Awareness Week has brought together pension savers and experts, as well as businesses and financial wellbeing organisations. Our aim is to help people make informed decisions by pushing the importance of having a pension in place.”
In fact whether it’s the cost-of-living crisis, the ups and downs in financial markets, or the new pension regulations it’s more important than ever that people and businesses in Ireland engage with pensions to secure their financial future.
Currently, the full state pension provides each individual with a pension of approximately €12,400 a year assuming you have paid the relevant PRSI contributions over your working life.
This provides each qualifying person a degree of comfort in knowing they will have some income each month.
But with the current situation and the financial storms ahead the current model is completely unsustainable in its current form.
According to pension experts the Social Insurance Fund has a current deficit of approximately €2 billion a year a a cumulative deficit of approximately €10 billion in more recent years and will continue escalating.
To address this, earlier this year the Minister for Social Protection announced details of the Final Design principles for the Automatic Enrolment Retirement Savings System for Ireland. Ireland is the only OECD country that doesn’t yet operate an Auto Enrolment or similar system as a means of promoting pension savings.
The new system is designed to simplify the pensions decision for workers and make it easier for employers to offer a workplace pension.
Under the scheme the employees will have access to a workplace pension savings scheme which is co-funded by their employer and the State.
A key feature of the system is that, although participation is voluntary, so that people don’t have to participate, it operates on an ‘opt-out’ rather than an ‘opt-in’ basis. To encourage workers to participate, those who choose to remain in the system will have their pension savings matched on a one-for-one basis by the employer, the State will provide a top-up of €1 for every €3 saved by the worker.
This means that for every €3 saved by the employee, a further €4 will be invested by the employer and the State combined.
What do these seminars and government scheme say about today’s worker attitudes? For many retirement seems a long way away and the process of putting aside a little each week to provide for retirement years is something to be considered next year, or longer! However, that is not the case. If people want to retain a reasonable standard of living in retirement, they need to start saving now.