Study shows employees not saving enough for retirement

A new study shows that Irish people aren’t saving nearly enough towards their retirement and may be in for a nasty surprise when they stop working.

The survey of 1,000 adults, which was carried out in the last week of September, reveals that while most Irish people would like to have a pension totalling almost €40,000 per annum, many are only saving towards an income of about €6,000 a year.

The study indicates that the average Irish pension saver puts just €137 per month towards their retirement whereas they would need to be saving considerably more than this to retire comfortably.

According to insurer Standard Life, which commissioned the survey, someone aged 30 years of age would need to be putting a minimum €400 aside per month to give them a pension of €22,000 per annum upon retirement. For older people, the minimum sum required is higher.

The survey reveals that 72 per cent of Irish adults need a retirement income of between €25,000 and €50,000 per annum. However, just 35 per cent save over €100 per month towards their pensions currently with 28 per cent putting aside less than €50 per month.

"The average person does not know how much to save but needs to find out," said Brendan Barr, head of marketing, Standard Life. "You don't want to be financially stressed when you're older, if you can avoid it. "We suspect people think saving €100 to €150 per month is 'box ticked' but our survey suggests it's not enough for most people," said Brendan Barr, Standard Life's head of marketing.

The study shows that 21 per cent of respondents wanted to live on a pension of more than €50,000 per annum. A further 12 per cent said a pension of between €20,000 to €25,000 per annum would be sufficient while 16 per cent said a pension of €20,000 per annum or less would be enough for them to have a comfortable retirement.

“Pensions are one of the most valuable tax breaks savers have and with the average group pension managed returns of 9 per cent over the last 30 years they should be a top financial priority for most people,” said Mr Barr.