BY JOHN ELLIS, FINANCIAL ADVISOR
As you read this Pensions Awareness Week (PAW) is just over . It is an initiative held annually in September to raise awareness in Ireland about retirement planning, and help people take charge of their long-term savings.
In conjunction with the week, PAW commissioned a new survey on peoples attitude to saving for retirement. The research surveyed more than 1,000 people nationally in late August and early September 2022 and was conducted by Behaviour & Attitudes (B&A)
The results make for depressing reading as it reveals real disparity between Dublin and the rest of the country with more people in Dublin having pensions. A total of 63% of people in Dublin hold some form of pension product, a figure that drops to 54% of people living outside the capital.
Also 43% of people don’t
have a pension with the majority saying they cannot afford it and two in five have delayed starting a pension due to the rising cost of living with another 4% have actually cashed in their pensions in order to deal with soaring energy and other costs.
The survey also found that more than two in five people in Ireland without a pension
have either delayed starting one or delayed their planned retirement date due to the cost-of-living crisis.
Of those with a pension, the increase in the cost of living has not impacted retirement savings for the large majority (69%).
However, 18% have either stopped payments, delayed their planned retirement date, or reduced their pension contributions.
The survey also shows that just under two in five (38%) already know they won’t have sufficient money saved for retirement with the same number believing they will need to work longer than they intended due to an insufficient pensions. Yet only one in ten of those without a pension have ever discussed retirement options with their workplace. And, even among those with a pension, attention to its performance is low with one in five having never checked what funds their pension is invested in.
Fewer than one in five of those without pensions have calculated how much money they need in retirement. With only one in twenty having sought advice from a financial advisor on pensions – or discussed retirement options with their workplace.
Women are less likely to have a pension than men, with just 48% of females stating having some form of pension product versus 65% of men. Of those with pensions, just over one in four have ever checked its current performance and just over one in five have calculated how much money they need in retirement.
Ralph Benson, founder of PAW and Moneycube.ie Head of Financial Advice, said: “The research from B&A shows there are two sides to the story of the cost-of-living crisis. What’s becoming clear is its long-term effects on people’s financial security. On the one hand there are those who have a surplus each month. Despite the mounting costs of energy and other basics, they can probably survive with just minor tweaks to their finances.
“On the other, we have people for whom the margins are much tighter and so are being forced to make decisions now that will impact when they can retire and the quality of life they will enjoy when they do. This research also reveals that most people haven’t checked the performance of their pension and even fewer know how much they will need in retirement. Pensions Awareness Week gives people a chance to join the conversation about building your retirement plans and check in on your financial health,” he said.
One other interesting fact from the survey is that nearly two-thirds of those aged 25-49 are open to hearing about pensions but find it too complicated to understand. This is where your financial advisor comes; whether you’re starting a pension, on the journey to or approaching retirement, they are there to help by making the way clear.