Bank of Ireland highlights dangers of failing to ‘Fund Your Future’ in drive to increase pensions awareness.
Almost three-quarters (74%) of Irish people are putting day-to-day spending ahead of saving for the future, pensions research by Bank of Ireland reveals.
The cost of living crisis combined with a lack of understanding of the benefits of pensions is leading to increasing levels of ‘pension inertia’ among the Irish public.
“It’s human nature to shy away from areas believed to be complex, but in doing so we are delaying taking important decisions that are in our best interests and help identify how much people can afford to set aside to enjoy a comfortable retirement”
With Pensions Awareness Week 2023 underway, the research reveals that 62% of pension savers are concerned they aren’t saving enough for their retirement.
Only 46% of people understand how pensions actually work and only 39% are aware of the tax breaks. Some 38% of people are thinking more about retirement planning, yet only 22% actually seek professional advice in this area.
Lack of understanding around pensions
Bernard Walsh, Head of Pensions & Investments at Bank of Ireland
Lack of understanding, closing the gap between male and female pension adoption, and ‘pension inertia’ are all obstacles that need to be addressed so that more people can place themselves on a firmer financial footing in their post-work years. The benefits of saving into a pension include;
- Marginal rate taxpayers reduce by €40 the cost of putting €100 into their pension
- Money grows tax-free while invested in a pension plan
- A significant amount can be drawn-down tax free upon retirement
Household deposits continue to rise according to recent data published by the Central Bank, but short-term saving is still the order of the day for large sections of society. This type of saving, which due to the ongoing cost of living challenges is a necessity for many, is nevertheless failing to adequately fund people’s future.
Therefore, a mandatory auto-enrolment pension scheme scheduled to come into force in 2024 should be welcomed, as it will lead to improved pensions coverage for over 750,000 workers nationwide.
Whilst auto-enrolment will apply to employees, workers who are self-employed will still have to arrange their own retirement plans.
“Lack of understanding of pensions is a recurring theme, as borne out once again by our latest survey,” said Bernard Walsh, Head of Pensions & Investments at Bank of Ireland.
“It’s human nature to shy away from areas believed to be complex, but in doing so we are delaying taking important decisions that are in our best interests and help identify how much people can afford to set aside to enjoy a comfortable retirement. Bank of Ireland is committed to improving people’s Financial Wellbeing, and we continue to encourage anyone with an interest in starting or adjusting a pension to engage with us so we can provide expert advice.”
“Pension inertia restricts us from making decisions that will help us properly fund our future. Our new six-episode Pension Pot webinar series, including an episode specifically created to help women bridge the pensions gap, is designed to take people through the basics of saving for the future. The series provides easy-to-understand advice and guidance, but also some important considerations for both employers and employees around the impending auto enrolment scheme.”
- To register for the latest round of webinars and to access a wide range of pensions materials please visit Bank of Ireland