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Monday 24 July 2017

Comment: Our 'golden years' are set to be longer but less gilded

(Stock photo)
(Stock photo)
Jim O'Brien

Jim O'Brien

There are lots of frightening words flying around about the shortfalls in our personal and national pension pots. It seems we are all going to live much longer and are set to become major bothers to our children and their offspring.

According to figures from the World Economic Forum, and quoted by my colleague Ellie Donnelly in the Irish Independent last week, the average UK citizen in 1960 was expected to live for 6.1 years after retirement. The current average person is expected to live for 16.6 years after he or she clears out the locker and in 2050 the average Brit is expected to live for 20.9 years after they get the bus pass.

I am reminded of an old Brendan Grace gag about a mountain village in Kerry where the air was so good they had to hire a man on a FAS scheme to patrol the graveyard with a big stick while shouting "Lie down now lads, lie down will ye."

The 'golden years' are set to get longer but there won't be much gold to gild them. According to the aforementioned World Economic Forum the gap in pensions globally in 2050 will amount to €375 trillion, five times the size of today's entire global economy.

This ought to be worrying for many of us on the sliding side of 50 who are in rude good health but seriously lacking in the pension department. Apparently we are facing a retirement where luxury will consist of a Marietta biscuit and a cup of tea brewed from a recycled teabag.

In an attempt to establish how I myself am fixed or unfixed in relation to the pension gap I took to poking around the innards of the 'Net'. In the course of my perusals I came across an organisation called the Pensions Authority. This regulatory body is charged, among other things, with providing "information and guidance material to help you understand pensions." The Authority's website has a calculator that will tell you how bleak or how bright your financial prospects are as you face into the years of slippers and Complan. With not a little trepidation I clicked on this calculator and, to cut a short story even shorter, it told me I'm goosed. If I wish to maintain my income at only 45pc of its current level I will need to put aside a figure equivalent to a hefty monthly mortgage repayment.

There isn't a hope of finding that kind of loot in my coffers. With three little ducks toddling inexorably to the finish line at secondary education, every spare bob has someone else's name on it for at least the next ten years. It looks like I'll be going cap in hand to one of Leo Varadkar's successors in the Department of Social Protection when the time comes to hand in my badge.

I wonder if it is as bleak as all that? Maybe it isn't. As I reflect on these things I recall how, at the end and at the beginning of every new era in my life I was bombarded with dire warnings about the penury and hard labour that lay ahead. For instance, as I approached the end of secondary school I remember people telling me the best years of my life were over, that I was about to enter the land of adulthood, a place of weeping, wailing and dental gnashing.


Before our first child was born seasoned parents would look at the bump and proceed to paint a dismal picture of sleepless nights, a decimated social life and mountains of nappies.

In these last 12 months as my eldest approaches Leaving Cert the sirens have been wailing in unrelenting cacophony about the cost of further education and how it will leave me in the poorhouse.

Looking back, the prophets and prophetesses of gloom have been as accurate as British political pollsters. I've had a grand life since secondary school; while I loved the five years spent in my poor man's Brideshead I was glad to leave the rules and restrictions behind.

When it came to having children they transformed my life. The sleepless nights were few and far between while the moments of joy, delight and profound love have been numerous, nourishing and full of goodness. Of course there are days when bachelorhood seems beautiful but that hill is too far away and no longer very green.

Is it vain to hope that without a fat pension the years of amber twilight might be enjoyed in relative comfort? I am inclined to think, based on my experience of life to date, that the doomsayers might once again be wrong. What's more, the harbingers of late-life penury are often in a position to profit from frightening people into pumping money into uncertain futures.

The question I have begun to ask myself isn't what will I need for a comfortable retirement, rather, what will I not need, what is surplus to requirements and how can I continue to turn a few bob in my dotage?

I certainly have no intention of sitting beside a spluttering stove in an overcoat and gloves while my money is in the hands of a pension fund manager lounging in air-conditioned splendour in a penthouse suite in lower Manhattan wondering if the Dom Pérignon is sufficiently chilled.

The four main kinds of pensions

■ CONTRIBUTORY STATE PENSION: People from the age of 66 onwards who have made sufficient social insurance (PRSI) contributions over the years are eligible. It is not means tested and one can earn some income while receiving it but is then liable for tax. The eligible age will rise to 67 in 2021 and 68 in 2028.

■ The non-contributory state pension: This is means tested and also paid after age 66. People who have no social insurance contributions can claim this and the qualifying age will also rise.

■ OCCUPATIONAL PENSION: Bigger companies or employers often have pension schemes for their employees. The customs and rules vary from company to company.

■ A PRSA (Personal Retirement Savings Account) allows individuals to save for their retirement. PRSAs are tax deductible and available from a variety of providers that include insurance companies and banks

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