Private pensions cover only six in 10 Irish workers
CSO study cites affordability and ‘failure to get around to it’ as main reasons for shortfall
Only six in 10 Irish workers have some form of private pension savings, according to new data published by the Central Statistics Office
The report shows that people continue to leave it late to start saving for retirement. The CSO figures show that fewer than one in five workers under the age of 25 had any private pension in place. This rises to almost 45 per cent for those aged between 25 and 35, and above 70 per cent among workers over the age of 45.
The figure has risen over the past year to 59.8 per cent from 56.3 per cent.
Among those who have yet to start a pension, 36 per cent said they had simply never got around to organising it with a further third saying they couldn’t afford it.
Private pension savings attract tax relief at the worker’s highest income tax rate. Most companies also offer to contribute to workers’ pensions where employees are also saving into such schemes.
The Government has plans to introduce autoenrolment in workplace pension schemes from 2022, which should address the issue of people who simply fail to get around to setting up a pension.
Among people who don’t have a personal or occupational pension scheme in place, 60 per cent said that they intend to rely on the state pension when they retire.
The CSO Pensions Survey is carried out on an annual basis as part of the Labour Force Survey. It includes pension coverage that workers have with the current employer and from previous jobs.
Jerry Moriarty, chief executive of the Irish Association of Pension Funds (IAPF) said the figures showed that just 50.4 per cent of workers are currently contributing to an occupational or private pension, though he acknowledged this was a “welcome improvement” on the 2018 figure.
“The last Public Service Pay Commission report found that, while there is almost 100 per cent pension coverage in the public sector and some parts of the private sector, the overall figure for the private sector is just 40 per cent,” he said.
Among those who are self-employed, just over half (51 per cent) had made some pension provision.
Foreign nationals continue to be far less likely to have some form of private pension saving, according to the data, although the figure is rising. While 63 per cent of Irish nationals have some form of occupational pension, the figure among foreign nationals is just 40 per cent.
The CSO survey found that 62 per cent of workers are members of defined contribution schemes – where the pension is determined by the contributions made and their investment performance. Over a third (36 per cent) belong to defined benefit schemes – where the pension is generally a proportion of final salary as determined by years of service. Defined benefit schemes are now mostly a feature of public sector employment.
Mr Moriarty noted that Ireland has an ageing population, with the 2016 Census report showing that there are now 296,837 males and 340,730 females aged 65 or older in Ireland.
“Those numbers are set to grow substantially over the next 10-15 years, driving up the cost of retirement provision to the State,” he said. “If the levels of private and individual pension provision remain as low as they are now, the Government will come under pressure to do more for pensioners as the current State Pension is set at a level to just keep people out of poverty. And, with the growing numbers of people receiving this, it will be difficult to even sustain it.”