€60 a week: that's all your pension will be worth
Published 16/08/2016 | 02:30
Workers have been warned that they face a massive shortfall in the level of pensions they are set to get in retirement.
The warning came as it emerged that the average worker only has enough in their private pension fund to give them a weekly income of €60 - that's €8.50 a day.
The head of the State's pensions regulator said that expectations around retirement income were unrealistic.
Chairman of the Pensions Authority David Begg said that what people expect to receive in retirement income was way out of line with what they will actually get.
He said too few workers had pensions and many of those that have a private pension in place were putting too little into it.
Mr Begg's comments come as research shows that the average person has only put enough into their pension to give them a weekly income of €60, excluding the State pension.
Yet half of people want to retire to live in the sun or by the sea. But the average person has only enough in their pension pot to give them a retirement income of €3,000 a year, according to new research by the pensions and investment firm Standard Life.
This is unlikely to allow them to realise their dreams of retiring to a seaside villa in Spain.
Most people opted for a figure of €31,000 when asked how much they would need a year to retire and live comfortably, according to the survey of 1,000 people commissioned by Standard Life.
But the average amount saved in private pensions is only enough to give an annual income of just one-tenth of this - €3,000 a year. This excludes the State contributory pension of close to €12,000 a year for those who qualify for it.
The number of people saving in a pension scheme, sometimes called a supplementary pension, has fallen since the financial collapse. Just 47pc of those who are in employment save towards a pension.
But once the public sector is excluded, some six out of 10 workers have no supplementary pension coverage, according to the 'Fuller Working Lives' report issued by the Government last week.
Head of the Pension Authority David Begg yesterday warned that the numbers of people in a pension scheme was falling, while many of those who were in schemes could expect a small retirement income.
"A lot of people have expectations about what they will get when they retire which will not necessarily be met," he told RTÉ's 'Today With Seán O'Rourke' programme.
He said poor investment returns, low annuity rates and high charges meant that someone with €100,000 saved into a retirement fund could only expect between €3,000 and €5,000 a year in retirement from this.
The former general secretary of the Irish Congress of Trade Unions, who took over a chairman of the Pensions Authority at the start of the year, said more people would have to be encouraged into saving for their retirement.
He warned that various reports had found that the State pension of €233 a week was unlikely to be kept at this level due to the future swelling of the ranks of the retired.
Standard Life's John McInerney said people had high expectations for their retirement, but they needed to save adequately for it.
He said: "My advice is to calculate how much you need to buy your house in the sun and how much income you need to live on comfortably. Sit down with a financial adviser and work out how much you need to save."