Â Friends First 2015
Annual pension research conducted by Friends First reveals that although household finances have improved for 2 in 5 households (37%), this is not reflected in the take up of private pensions.
Private pension ownership remains stable overall at 46% of adults. On a positive note, those aged 25 to 34 showed an increase in private pension ownership. This is despite the research showing that almost 8 in 10 (76%) respondents were not confident of having sufficient income on retirement.
When those without a private pension were asked what they would live on when they retired, 44% (2014: 40%) indicated the State pension (currently c. â‚¬230 per week) would be their sole income in retirement (that equates to 890,000 people), with a further 1 in 3 (33%) admitting they hadnâ€™t really thought about it.
Key findings from the â€˜2015 Friends First Pensions Indexâ€™ are as follows:
- 43% have no pension of their own and no spousal pension
- 55%, rising to 67% of over 35â€™s, cite affordability as the key barrier to starting a pension
- The only age group that recorded a growth in private pension ownership is 25-34 year olds with 4 in 10 (39%) now having a pension (2014: 36%)
- Of those that do not have a pension, over half (55%) of 25-34 year olds stated they are likely to take out a pension at some point in the future
- A further 3 in 10 (29%) of 45-55 year olds who donâ€™t have a pension indicated they may rule out private pension ownership altogether
- Auto-enrolment in a pension would be the main driver of pension uptake according to one third of those without a pension
When asked about their financial circumstances:
- 37% of households in Ireland stated that they have experienced an improvement in the past year
- 1 in 3 (31%) households have received an increase in their wage/salary
- 1 in 4 (25%) experienced an increase in their working hours
- 37%, rising to 45% of 25-34 year olds, can meet all of their monthly financial commitments
- If more disposable income becomes available, short to medium term savings is a priority for 1 in 3 (33%), followed by home improvements (25%), a holiday (15%) and a pension (10%)
Commenting on the research, Simon Hoffman, Pensions & Investments Director, Friends First said: â€œThe postponement of financial planning for the future is still a concern. We have an aging population and the number set to rely on the State pension as their sole retirement is around the 890,000 mark. This will put a huge strain on the State in the coming years as those without a private pension may struggle financially in their retirement and will be depending on a pension that is less than the current minimum wage.â€
Mr Hoffman concluded: â€œHowever, with improving economic circumstances and consumer spending beginning to increase, pension affordability should become less of a barrier. The bottom line is although it is better to start early, it is never too late to start making provisions for a comfortable retirement.â€
For those who do have a pension, (ownership remains steady at 44%), the trend for reducing contributions appears to have ceased with a modest increase in premiums by almost 20% of this group. This is very positive and shows that once a pension is understood and taken out, there is a confidence in the benefits of it and good habits form.
About the research:
Behaviour & Attitudes carried out an online survey of 1,001 Adults aged 25 – 55, living in the Republic of Ireland on behalf of Friends First. Fieldwork was carried out from 1st â€“ 9th July 2015