Although as a nation Ireland is not engaged in adequate financial planning for retirement, we are very open to it and we recognise that in the face of an ageing population a compulsory option might now be needed.
This is according to findings from a recent nationwide survey commissioned by the IAPF which revealed that 77% of respondents believe they are not saving enough for a reasonable standard of living in retirement – with 23% saying they are not saving anything at all.
Speaking at IAPF’s annual Defined Contribution conference this morning (Thursday) Jerry Moriarty, its CEO of gave his thoughts on the results, “The pensions sector and the Government know that we are facing a major national problem when it comes to pensions – outside of employer schemes, people are simply not saving enough – if at all. So the results of the survey, while worrying, are not surprising. More importantly they reinforce the urgent need to develop and implement a long-term pension policy.
However, what we believe to be the most revealing element of the survey is that 70% of people say that they would be in favour of the Government introducing a type of mandatory pension scheme to encourage more people to save for their retirement. So in fact, the Irish public do recognise that there is insufficient retirement planning taking place, and they are cognisant of the fact that something more drastic than just encouraging people to save into a pension may need to be done. The percentage support for the Government’s plan is even higher amongst older people (55+) at 80% – many of these respondents are already retired and so have a better understanding of exactly how much people in retirement need to live on”.
Jerry continued, “The only way in which we can tackle the pension crisis is by engaging with the people that are most affected – those workers with little or no pension provision. Ultimately, we need “buy-in” from this group. So it bodes well for the Government’s plans to introduce some form of compulsory pension scheme that the majority are open to this initiative”.
The IAPF survey revealed that men and women have pretty much the same opinions when it comes to whether or not they are saving enough for retirement. However, people in different age brackets seem to vary in opinion.
Jerry explained, “Worryingly the lowest % of people who feel they will have enough for a reasonable standard of living in retirement are in the 35-54 age group at just 20%. Not surprisingly, this is the same group whose relatively wealth was most impacted by recession. A higher percentage of those over 55 believe they will have reasonable standard of living in retirement, but it’s still disappointing at 31%. Clearly there’s a massive divergence between our aspiration for an enjoyable retirement and our actions through our working life to make it happen.”
When asked “Do you believe that you or your employer are saving enough to give you a reasonable standard of living in retirement?
Respondents answered as follows:
Jerry went on to say, “Broadly speaking most of the people surveyed are open to the suggestion of a mandatory pension scheme, but middle aged adults (35-54) appear to be slightly more reticent about it – this might be to do with the fact that they could be the group who are most financially stressed at this point in time – many/ most with mortgages and possibly dependent children”.
When asked “Would you be in favour of the Government introducing a type of mandatory pension scheme to encourage more people to save for their retirement?”
Jerry concluded, “In February of this year the Tánaiste announced the establishment of a new Universal Retirement Savings Group to “develop a roadmap and timeline” for the introduction of a new universal supplementary retirement savings scheme – our survey results hammer home the real need for such an initiative sooner rather than later, and in a pre-election year the Minister and the Government alike should capitalise on the widespread support this survey reveals.
The crux of the matter is that the Government needs more action and less rhetoric – at this point it is important that we don’t just add to the many previous reports and recommendations that have not been implemented”.