Affordability is main barrier to putting a pension in place

Plan ahead: Almost one million workers have no pension provision outside of the State pension

Charlie Weston Twitter Email

April 05 2021 02:30 AM

A lack of available funds is the main barrier to pension saving for those who do not have a retirement scheme in place.

Others say they have not got around to setting up a pension but plan to do so in the future.

Lack of financial means is preventing many non-pension savers from retirement planning.

The survey, which was commissioned by life and pensions company Royal London, sought to gain insight into the barriers surrounding pensions saving in Ireland.

It found that 43pc said they cannot afford to contribute to a retirement plan.

Some 29pc said they plan to start a pension in the future.

One in five said they would rather save money into other savings or investment products. And 17pc said they expected to get the State pension and believed that would be sufficient.

Mark Reilly, pensions proposition lead at Royal London, said the survey highlighted affordability as the number one barrier to pension saving for those who did not have a pension.

“This shows the need for State agencies and providers to address the affordability issue through education and greater engagement.

“It’s hugely important that rather than simply see a pension contribution as just another outgoing that must be met each month, people realise that this money is to support their income in retirement.”

Plans for an auto-enrolment scheme, which would mean workers automatically save for their retirement with an incentive from the State and employers, have been postponed repeatedly.

Almost one million workers have no pension provision outside of the State pension.

Mr Reilly said: “Too many people assume the State pension will take care of them in retirement, but with the number of retirees set to mushroom over the next few years, it’s no longer a certainty that it will remain at current levels.”

An expected decline in the number of workers relative to the number of people in retirement means there is pressure to raise the age at which people can get the State pension.

A Government commission is considering how to fund future State pensions after plans to move the State pensions age to 67 this year were abandoned.

Mr Reilly said too few people were aware of immediate and long-term tax benefits of contributing to a private pension, or one provided by an employer.

“While people might know that there is tax relief, my sense is that many simply don’t know how it works or more importantly how beneficial it is,” he said.

He said that if you were on the higher rate of income tax, then for every €10 invested you get €4 in tax relief, which means your net cost is just €6.