Pension savers told to triple contributions
PEOPLE with a private-sector pension need to triple the amount of money they are putting into it every month to have any hope of retiring on a decent income, the Irish Association of Pension Funds (IAPF) said.
Most people are putting just 6pc of their salary into a typical defined contribution pension but need to be putting in 20pc.
IAPF chair Marie Collins said that as defined contribution membership grows, it was critical that a solid foundation was now laid for these schemes.
A defined contribution pension is one where the level of the retirement fund is determined by the investment returns.
The IAPF conference in Dublin yesterday was told that some losses were being clawed back following the 2008 market collapse. But if members had a shortfall, they needed to be looking at how they could bridge the gap, or lower their pension expectation in retirement.
The IAPF is concerned the introduction of the State's auto-enrolment scheme could damage better pensions schemes and encourage lower savings.
"The danger is that the mandatory employer contribution of 2pc could become the norm. The total contribution (State, member and employer) of 8pc, as set out in the National Framework Document, will send the wrong message to defined contribution savers who will need larger contributions for adequate retirement income," it said.