Pension gap growing as crisis looms

THE pension gap in Kerry continues to widen.

According to new figures published by Aviva Insurance the pension gap in Kerry – the difference between pension savings and actual income needs after retirement – has grown by over 35 per cent in the last five years.

According to Avivia, the 147,554 people living in Kerry now have a total pension gap of €862,131,545.

That represents a surge of 35 per cent in comparison to the first Aviva ‘Mind the Gap’ pension research survey in 2010.

The gap across Ireland has increased by a total of 38 per cent compared to an average increase of just six per cent across the rest of Europe.

The scale of the gap means the current generation of retirees – those due to retire between 2017 and 2057 - will have to save, on average, an additional €12,200 a year or €1,017 per month just to meet their basic needs after retirement.

The size of the gap depends on a person’s age.

Younger workers face a smaller gap because they have more time to save for retirement but the gap has widened for all age groups in the last six years.

Those in their sixties are worst affected and they face the largest gap; an average of €28,000 per year, up from €21,100 in 2010.

For this group, many of whom are still feeling the financial impacts of the recession, the gap between their savings and the retirement income they had hoped for may be insurmountable.

The Aviva report found that while postponing the retirement age and increasing the State Pension would help reduce the gap, these efforts will be fruitless unless the decline in the numbers saving into a private pension is reversed.

Aviva said the answer to the problem of poor pension coverage could be the introduction of a universal pension system under which all workers would automatically be enrolled in a pension scheme by their employers. This system, introduced in the UK in 2012, was among the factors that contributed to a fall of four per cent in the UK’s pension gap.