Irish workers are less optimistic about financial ability to retire, survey finds

State Street Global Advisors says rising prices are workers’ biggest concern, but just 13% are reducing pension savings to save money now

Irish workers’ confidence that they will be financially prepared for retirement is falling, according to a new study by State Street Gobal Advisors (SSGA).

Close to half, 46 per cent, say they are not optimistic they will have sufficient money saved to retire, up six points from a similar survey in the heart of the Covid pandemic in December 2020. The cost-of-living crisis, inflation and a lack of spare money to put into a pension are cited as the main reasons for the growing pessimism on retirement income.

However, the Irish are not as downbeat as our neighbours in Britain, where 60 per cent are similarly gloomy about their pension prospects.

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The growing concern among workers about the state of their pensions amid a dramatic increase in volatility in investment markets last year is highlighted by an increase in savers checking the balance of their pension accounts over recent months.

“While it may be concerning to see a notoriously unengaged population of savers paying closer attention to short-term fluctuations in pension balances, it was positive to see that most had maintained their contribution rates over the past six months,” SSGA said in its report.

Only 13 per cent of Irish respondents said they had reduced the amount they were putting aside for their pension over the past six months.

That’s noticeably higher than the UK where just under half that number (6 per cent) took similar action – which SSGA attributes this to the presence of autoenrolment in the UK market – but a quarter of Irish workers increased their pension savings over the same period, a full 10 points ahead of their British counterparts.

Fewer than a quarter (22 per cent) of people taking the survey in four countries – the US, Australia, the UK and Ireland – said they did not want to remain employed in any capacity after retirement age.

When asked what supports would need to be in place to facilitate longer working lives, the most popular answer was “flexible working arrangements”, which resonated with 47 per cent of respondents globally and in Ireland. The ability to move to part-time work was selected by 30 per cent of Irish respondents, the second most common answer, but well shy of the 46 per cent globally backing this option.

Asked what was the biggest planning concern specific to retirement, Irish respondents were least likely to express concern about outliving their savings. However, they were more concerned than those in other countries about their ability in retirement to meet significant unexpected costs in areas like rent and medical bills.

And, in keeping with the Irish commitment to inheritance, they were also most concerned among the four countries about not having any money to leave to their families when they die.

In common with other countries, Irish people are significantly less likely to consider property investment or downsizing as delivering an income stream in retirement than they were just four years ago, a trend perhaps explained by the growing number of people struggling to buy a home at all.

There is a slight increase in the numbers who anticipate refinancing their family home to release equity to boost their standard of living.

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times