Fears for ageing population as just four in 10 have pensions

Charlie Weston Personal Finance Editor

August 13 2013 04:03 AM

MOST adults have nothing saved for their old age.

As controversy rages about threats to cut the state pension, a new survey reveals that just four out of 10 people have a private or company pension.

Men are more likely to have a retirement scheme in place than women, according to the latest survey commissioned by Standard Life.

The results point to a massive problem being stored up as a rapidly ageing population is heading for retirement with most set to depend on the State to fund their days after work. The survey found that 58pc of those surveyed by Research Plus Ltd have no pension, with just 42pc saying they have a pension.

More than 1,000 adults were surveyed in June and July.

Head of pensions at Standard Life, Jim Connolly, said: "Many people's perceptions of pensions are negative and we need to change that."

Mr Connolly said that many people were unaware that tax relief on pensions was still relatively generous.

Money put into a pension gets tax relief at 41pc. This means that a worker can put €100 into a pension fund at a net cost of €59. And he said retirement funds had been performing strongly in the past few years.

He quoted figures from Moneymate showing an average annual return of 9.7pc over 30 years.

This means if a person had saved €200 per month into the average managed pension fund for the last 30 years, they would now have a nest egg of €293,400. This is just over four times your money back from the total amount of money saved.

"Pension charges for the vast majority of people are very competitive," Mr Connolly said.

For taxpayers, pensions are probably the only realistic way of saving a decent nest egg, he stressed.

Close to one million workers have no pension to look forward to in retirement other than the one provided by the state.

Universal

Poor pension coverage prompted the OECD (Organisation for Economic Co-operation and Development) to advise the Government to introduce a universal pensions for those who do not have a private or employer-based one.

Auto-enrolment is where workers are enrolled automatically by their employer in a private pension scheme unless they explicitly decide to opt out.

Payments into private schemes could be targeted at workers above a certain income level. The household benefits package and free travel could be transformed into a cash supplement, available to all or means-tested, the OECD said.

But the Government fears forcing people to join a pension would be seen as another tax, and has not committed to providing a timeline for how the measure might be implemented.