Increasing numbers plan to rely only on State pension

Irish people are relying increasingly on the State pension as their only income in retirement – just as doubts grow about the sustainability of the weekly retirement payment.

Although a growing number of people report that household finances are improving, 44 per cent of those without a private pension say they will rely solely on the State for their income in retirement.

Up from 40%

That’s up from 40 per cent last year, and equates to around 890,000 people.

A further third say they haven't thought about what they will live on in retirement, according to the annual Pensions Index survey by Friends First.

Asked what they would do if their disposable income increased, just one in 10 said they would invest in a pension, compared to 15 per cent who would spend the money on a holiday and 25 per cent who plumped for home improvements.

Despite this, just over three-quarters of all respondents said they were not confident that they would have sufficient income in retirement.

Among those who do have pensions, the survey found that the recession era trend of reducing contributions appears to be at an end, with 20 per cent increasing their premiums.

"The postponement of financial planning for the future is still a concern," said Simon Hoffman, pensions and investments director at Friends First.

‘Huge strain’

“The number of people opting to rely on the State pension will put a huge strain on the State in the coming years as those without a private pension may struggle financially in their retirement and will be depending on a pension that is less than the current minimum wage.”

One age group reported growth in pension provision – the 25-34-year-old cohort, where 39 per cent now have a private pension plan, up from 36 per cent last year.