Almost one in five companies say they do not know if plans for a mandatory workplace pension will affect them, according to one of the organisers of Pensions Awareness Week, which runs from today.
Feargal McKenna, the man behind the annual event to raise awareness around retirement finance, says it is just one example of the widespread confusion around pensions – on everything from costs to performance to regulations.
A survey carried out by online investment platform Moneycube.ie found that close to half of people were relying on their own research in choosing a pension plan without taking financial advice, “and of these, 39 per cent are not maximising the tax relief they are entitled to for their pensions contributions”.
And even among those getting professional financial advice, a third had no idea what fees they were paying, with estimates ranging from zero to 30 per cent, said Mr McKenna, head of corporate at Moneycube.
In a separate survey, Brokers Ireland found the pension savings of people who take advice are almost twice the level of those who don’t.
Rachel McGovern, director of financial services at the group which represents more than 1,200 brokers across the State, noted that to enjoy €2,500 per month in retirement from the age of 66, a 30-year old would need to save €1,214 per month, or €728 net with tax relief at 40 per cent.
To illustrate the importance of starting to save early, she says: “Someone who starts contributing €100 a month to pension at age 25, which, because of excellent tax relief, is only €60 net if one is on the marginal rate of tax, will have a pension pot of over €79,000 at age 65. If s/he waits to start the same savings level at age 35 s/he will have a much lesser figure of almost €52,000 and if left to age 45 to start will have a pension pot of only €30,000 at age 65.”
One in four of those surveyed by Moneycube did not have a current pension plan.
Now in its fifth year, Pensions Awareness Week is backed by a host of industry groups including Ibec, the Retirement Planning Council and the Small Firms Association.