Workers paying less into pension schemes
TWO-thirds of households have seen their income reduced in the last year.
The squeeze on incomes has caused one-in-five workers to reduce paying into their pension scheme. And half of those who have reduced pension payments have stopped contributing to a scheme altogether, according to research commissioned by Friends First.
The numbers who have cut out the pension payment has not changed from last year.
And despite large numbers giving up on putting money into a retirement fund, there has been a small rise in the overall number investing in a pension.
Among the reasons for not having a pension is the sheer complexity of the system around building up a retirement fund, according to Empathy Research's findings from 1,000 people.
Large numbers of people say they do not understand pensions.
But the research also revealed support for Government plans to automatically enroll people with no pension into a private scheme.
More than one-in-10 of those who have no pension would be encouraged to start one if they were automatically enrolled into a voluntary pension scheme.
Minister for Social Protection Joan Burton is expected to announce details soon of a scheme to enroll everyone in a job who does not have a pension into a scheme, along with paying for a State pension through pay-related social insurance (PRSI) contributions.
The scheme would not be likely to begin until the economy improves.
Head of pensions and investments at Friends First, Simon Hoffman, admitted there was a need to make pensions easier to understand.
"If we can make the pensions landscape simpler and more accessible, then there is a real opportunity to increase pension coverage among private sector employees in Ireland," Mr Hoffman said.
He said it was encouraging that even though households were under financial pressure, there was still an eagerness to put money aside for retirement.
The research also showed that large numbers of workers would like access to their pension fund if they fell on hard times.
Mr Hoffman said: "We have been conducting this research for a number of years now and consumers are consistently telling us that although money is tight, simplifying the system and improving accessibility are the most effective ways to encourage greater private pension participation."