Getting Ready to Retire

Getting “Retirement Ready”
It’s more than just financial preparation.

Mention retirement planning and more often than not, people’s thoughts turn straight to financial planning and pension provision. Scratch the surface, however, and people’s concerns can run a little deeper than financial fears. There is more to consider as we embark on this transitional life stage than counting one’s pennies. Yet, this is generally the area where employers feel most obliged to support their staff.

ARFs Annuities

The reality is that retirement – as with all transitions in life – can be a time of great upheaval emotionally, psychologically and physically. For that reason, it is equally as important for people to consider the non-financial implications of their move from the workplace into the new life stage of retirement.

A survey published by the Retirement Planning Council of Ireland in November 2014 indicated that half of people approaching retirement did not feel ready to retire. Feelings of apprehension, worry and concern were dominant despite the fact that more than two-thirds of the same group have some kind of financial provision in place and believe they will be financially secure when they retire. This implies that something else beyond financial planning is at play, causing feelings of uneasiness.

Our wellbeing at any stage in life is dependent on balancing three elements – prosperity or finance, health and happiness. When we retire we undergo a transition process through which almost every aspect of our life will change, regardless of career history or professional background. This can have a major impact on our happiness levels. Our daily routine, the amount of spare time we have, our social networks and personal relationships will all shift dramatically. Our role in society, the status that often goes along with that role and the way that might have shaped our personal identity can also be affected. As we grow older we also need to focus more upon our health and how we manage it. Failure to recognise these lifestyle changes – let alone plan for them – can lead to a very difficult existence.

Encouragingly, the same Retirement Planning Council research has also highlighted that once people had taken the time to consider the lifestyle changes ahead and understand how they might deal with them, they felt significantly more upbeat about their retirement. A remarkable 95% of people felt excited, positive and optimistic about their retirement upon completion of a retirement planning course focusing on the psychological, physical and financial elements of retirement.

Undeniably, financial preparation for retirement is vital but without consideration for the lifestyle shift, many people will struggle to adapt to their new way of life. Tending to the psychological portfolio is equally as important as building the financial one and giving some serious time and thought to preparing oneself will go a long way to smoothing the transition into this new life stage.
Elizabeth Carvill is Head of Development at the Retirement Planning Council of Ireland, an independent not-for-profit organisation working with more than 400 organisations to support their staff as they approach retirement by delivering a range of practical pre-retirement courses. See for more information

77% will not have enough money in retirement

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:

 Pension survey

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?

Respondents answered:

pension survey

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”.





Press Release14.05.2015


The case for mandatory pension schemes

In a recent survey conducted by the IAPF and iReach, it emerged that only half of those working are participating in a pension scheme. While older survey respondents showed a much stronger awareness about pensions, a huge 80% of those under 35 did not know how much (or how little) one receives from the State pension. While this is not altogether surprising, at what point does the awareness around pensions kick in, and at that point is it too late to start a realistic provision for retirement? Is it time to introduce a mandatory pension plan?


The Government has come up with a name for a new mandatory occupational pension but has not given any date for its implementation. The new MySaver scheme is designed for those without any pension in place other than the state pension, Minister for Social Protection Joan Burton said.

The Small Firms Association has signalled its opposition to the idea of a mandatory pension scheme for Irish workers.

In its submission to the Universal Retirement Savings Group, which is examining the issue on behalf of the Department of Social Protection, the SFA says mandatory pension provision will prove costly to employees, to business and the state, without any associated benefits in the long term.

Patricia Callan, director of the Small Firms Association, says the fundamental reason the SFA is opposed to the idea is that not enough work has been done to promote the voluntary approach to pension provision. Ms Callan says the SFA is also very concerned about any increase in the cost of employment, particularly at this time when small businesses are just about getting back on their feet. She says that many SMEs are not even engaged in the concept of pay increases as yet. A mandatory pension scheme would be an extra cost for SMEs because in any such scheme there is always an employer’s contribution as well as an employee’s contribution – which by and large comes back on an employer in the form of a pay claim – and an Exchequer contribution, which is funded by both employees and employers.

Ms Callan also says that a call for a mandatory pension scheme is an “over-reaction” as Ireland has a much younger population that the rest of the EU, which is following this mandatory trend and the economy has a lot of other measures which could be implemented to solve the pension crisis. She adds, however, that the Association does accept that a crisis does exist in the pension system.

The SFA director says that if there was more of a focus on getting people into work, on creating a better and more dynamic economy, then a pension crisis will not arise as the country will be able to fund a pension scheme better. “In particular, in terms of trying to persuade people that private pensions are the best way to go, we need better products, less charges and a much more guaranteed sense of return,” Ms Callan says.


Summary of Finance Bill 2014 and impact on Pensions

ARF Imputed Distribution rate reduced

We welcome the reduction in the Imputed Distribution rate for ARFs and Vested-PRSA-ARFs (up to €2m) from 5% down to 4% between the ages of 60 and 70. The purpose of the change is to reduce the risk that ARF owners will outlive their retirement funds (by reducing the possibility of the fund running out). However, it is a pity that the age limit of 70 applies, and the Imputed Distribution Rate reverts back to 5% thereafter.

Withdrawals from AMRF now permitted but…

For the first time, new provisions will allow a maximum annual withdrawal of 4% (subject to taxation) from an AMRF (but not, it appears, from Vested-PRSAAMRFs). However, after 1 January 2015, it will NO LONGER be possible to withdraw income or gains made by an AMRF in excess of 4%, so AMRF-holders wishing to access fund growth from their AMRF in the near future should consider withdrawing these gains before 31 December 2014. Otherwise future withdrawals from the AMRF will be limited to 4% (under the current proposals).

Pension Levy is no more!

The good news for pension clients is that the Budget and Finance Bill has given certainty that the Pensions Levy will be ceasing after 2015 and customers have a “Green Light” to continue contributing to their pension and receive tax relief as before. Their pension continues to be the most tax-efficient way of saving for their retirement.