Putting a pension in place
The state pension is merely designed to keep you out of poverty, so if you want quality of life on retiring, start a pension plan now, writes Charlie Weston
Published 29/09/2016 | 02:30
LAST year, a survey was commissioned to examine retirement planning in Ireland, and gauge people's opinions and expectations around their retirement age.
The survey concluded that many people simply avoid thinking about retirement for much of their working lives, and that millennials were least concerned with financial issues pertaining to retirement.
The study, commissioned by the Irish Association of Pension Funds (IAPF), also found that almost 80pc of adults in Ireland between the ages of 18 and 35 were unaware of the current state pension level.
While the study showed a lack of pensions knowledge among Ireland's millennials, they did display a realistic attitude towards the issue of financial provision in retirement, according to chief executive of the IAPF, Jerry Moriarty.
The IAPF represents the interests of Irish occupational pensions schemes in Ireland.
Half of all 18 to 35 year olds believe that they will have to work to at least 70, and over one-third say they will need to work as long as they can.
However, it seems that Ireland's 20 and 30-something men and women have different ideas about working past the current retirement age.
Some 41pc of women see themselves still working at 70 (or as long as they can), while only 34pc of men intend to be in the same situation.
"Our survey went some way in shedding light on the attitude of those at the younger end of Ireland's workforce spectrum on an issue which is actually on its way to reaching crisis point in this country - whether they know it or not."
He said that, to be fair, millennials' lack of understanding of pensions isn't their fault.
The lion's share of that responsibility lies with the previous generation who have created a complex level of legislation, taxation rules and policy terms and conditions that would baffle some of the smartest brains, he said.
On the positive side, millennials don't actually need to know much about the complexities of pensions.
Mr Moriarty said it is sufficient to know that they are merely long-term savings pots.
"Certainly, there are many types, but invariably your occupation will dictate which one you go for," he said.
For example, if your employer has an existing scheme for employees, it's usually simply a case being asked by the HR department when you join, or six months after joining, if you want to become a member of the pension scheme.
If the employer is willing to contribute, the arguments for joining are usually overwhelming, he said.
In the UK, employers now have to put employees in a pension scheme and give them the option to opt-out of it.
Younger people are the least likely to opt out which shows they are interested in saving for retirement.
If your employer doesn't have a pension scheme, or you are self- employed, you'll need to get help from a third party, usually a financial adviser, often known as a broker, to advise and assist you in starting one.
The simple advice is start early, ideally with your very first pay check. If you never had it, you will never miss it, the IAPF boss said.
"Burying one's heads in the sand and simply committing to work forever can't replace sensible retirement planning.
"Our survey showed that those over 55 and facing retirement, appear to have greater awareness of how difficult their retirement maybe, as many have left it too late to start a financial plan that will have a meaningful impact on quality of their life in retirement," Mr Moriarty said.