Three in ten workers are not saving for pension
ALMOST a third of workers are not saving for a pension and will have to rely on the State’s maximum of €277 a week when they retire.
New Government rules will mean that everyone will be automatically enrolled into a pension scheme, which is due to come into force later this year.
However, the scheme has been described as ‘ambitious’ and critics do not now expect it to start until next year or even as late as 2026.
Pension coverage is greatest at 77% among workers aged 45 to 54, figures from last year show which is unchanged from 2022.
A Central Statistics Office report yesterday stated: ‘It remained lowest among young workers with 33% aged 20-24 years having some form of pension coverage.’
The current low take-up was described as ‘concerning’ by pensions expert Mark Reilly, of Royal London Ireland.
He said: ‘Almost a third (32%) of workers have no private pension coverage and will therefore be depending only on the State pension in retirement.
‘The maximum State pension is currently €277.30 a week for those aged 66 to 79 – or €287.30 a week for those aged 80 or older.
‘It is also concerning that the report shows there has been only a very slight improvement in private pension coverage since the latest figures were published a year ago.’
For employees with occupational pensions from their current employment, the number with ‘defined benefit’ pensions decreased in 2023 (30% compared with 32% in 2022), while the number with ‘defined contribution’ pensions increased to 66% from 62% in 2022.
A ‘defined benefit’ pension promises a certain payout at retirement whereas a ‘defined contribution’ is the amount someone has saved into their pension fund with no guarantee of how much the investment will pay out on a monthly basis.
Of employees with no supplementary pension cover, 43% said affordability was the main reason they had not saved more.
A further 43% said they ‘never got around to organising it or would organise it at a future date’.
The State pension was named as the expected main source of income on retirement for 59% workers with no other pension savings, up two percentage points on 2022.
Of those surveyed who are eligible for the Auto Enrolment Scheme, one in five were aware of it, and of these, 72% said they would stay in the scheme if they were automatically enrolled in it, which is up seven percentage points on the same period in 2022.
‘Never got around to organising it’