33pc of people fear they may have to retire later due to impact of pandemic
Survey finds workers put money towards mortgages, not pensions
NEARLY one in three people believe they may be forced to retire later than expected because of the economic impact of Covid-19, according to a new survey by KBC Bank Ireland.
The KBC Consumer Sentiment Pensions Survey 2020 found 29pc of consumers believe the financial hit from Covid will add years to their working life, with another 30pc unsure of the impact.
“The heightened uncertainty of the crisis increases the likelihood that people will simply default to doing nothing about their pension,” said Austin Hughes, chief economist at KBC Bank Ireland. “People accept that they have to work longer rather than save harder. It’s worrying that this is the reflex.”
Covid-related financial concerns were most pronounced among under-35s, although among the 15pc of respondents who said their retirement plans had already been affected, most were now at retirement age.
The survey results come after the Government decided to impose Level 3 restrictions across the country to fight a nationwide resurgence of the coronavirus, threatening jobs and incomes across a number of sectors.
KBC also found a wide divergence between what people expected from their retirement and how they could realistically pay for it.
Most respondents were able to specify what they wanted to do after they stopped working – for instance, travelling or devoting time to hobbies – yet only one in five expected to enjoy a financially comfortable retirement.
Pension affordability and competing financial priorities were a barrier for half of consumers, KBC found. A little more than one-third of
people simply do not have the spare cash to put into retirement savings, while another 16pc chose to put their money toward housing, education or other cost-of-living expenses.
Mr Hughes drew a contrast between people increasing their retail deposits this year while not adding to their pension savings for the long term.
“It’s easy for people to postpone pension saving because the impact is not immediate,” he said. “But Covid should really prompt people to think about that. People see now that it’s prudent to save for the short term, but not for the long term.”
Nonetheless, almost of half of people surveyed by KBC said they expected the State pension to be their main source of income in retirement, while only 18pc were relying primarily on personal pensions.
KBC found people aged 45-50 were under the most financial strain and most likely to fear having financial problems in retirement. The bank found that just 7pc of respondents overall believed they would be completely financial comfortable in old age.
“A significant number are retiring on just a State pension and that is inadequate,” said Hughes. “Older people are finding they are coming up on a problem. There is a significant cohort of those aged 45 to 65 who are going to the departure lounge and don’t have a ticket for the flight.”