One in five Irish adults has made no financial arrangements to provide an income in retirement, according to research carried out by the Irish consumer protection agency. And the figure is even higher for people over the age of 55.
The study by the Competition and Consumer Protection Commission (CCPC) said that just under four in 10 consumers are confident that their pension will allow them a good standard of living when they retire, with many uncertain of what to expect.
Half of all respondents said they planned to use personal savings to augment their income in retirement, which the CCPC says points to a lack of understanding of the very advantageous tax relief available for pension savings.
Asked why they had yet to start a private pension, three in 10 people said they could not afford it, up noticeably on the numbers making the same point in recent years. Older people were more likely to make the case about affordability with 43 per cent of those over the age of 55 citing it as an issue.
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Another quarter of respondents said they simply had not got around to starting a pension yet, a number heavily skewed towards younger respondents — those aged under 34.
There was a sharp increase in the numbers blaming their failure to secure stable employment to date, which may point to the impact of the growing gig economy or the trend among employers towards shorter-term contract work over full-time staffing.
Two-thirds said they had never even spoken to an expert about retirement planning. People who said they had sought advice did so most commonly through their employer.
Seventy per cent of respondents said they would be more willing to increase their pension contributions if they were matched by the employer.
Three per cent said they simply did not intend to retire at all. That chimes with a growing number of people who do not expect to stop working when they reach the State retirement age of 66. One in eight does not intend to retire at the age of 70, with a further one in 10 expecting to continue working beyond that point.
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The older people are, the older the age at which they expect to retire. The average expected age of retirement among those aged 65 and older was 71: at the other end of the spectrum 29 per cent of those aged under 35 plan to stop working even before they turn 65.
The position on retirement may have something to do with home ownership. While almost seven in 10 people expect they will own their homes mortgage-free when they retire, nearly one in 10 expects they will either still be paying off their home loan in retirement or will use their pension tax-free lump sum to pay off the sum remaining.
More than one in 10 expect they will be renting when they retire, a number that is higher among those who are under the age of 35.
The CCPC survey interviewed 739 adults who were not yet retired for the survey. It carried out similar studies in each of the last two years.
Commenting on the findings, Gráinne Griffin, director of communications at the CCPC, said: “It’s clear that a significant pensions gap still exists, even among workers who are only 10 or 20 years away from retirement. We strongly encourage consumers, particularly anyone over 30, who doesn’t have a pension to set one up immediately, even if their contributions are very small.”
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