Ireland’s pension crisis continues to deepen, with figures published on Monday showing that private pension provision is declining as the numbers set to depend on a state pension jump from 26 per cent in 2009 to 36 per cent in 2015. The decline in private pensions is most marked for millenials, with just a little over third having their own pension, while the self-employed are now likely to work for longer as their pension cover drops.
The figures, which were published on Monday as part of the Central Statistics Office Quarterly National Household Survey, give the first official update on pension provision since 2009. The survey was carried out among workers aged aged 20 to 69 years in the fourth quarter of 2015, and shows a significant decline in private pension provision, and an associated sharp rise in dependence on the state pension. The increase in reliance on the state pension will be of particular concern given the peak in funding costs of the payment as a result of demographics and the aging population.
Pension coverage
The figures show a sharp fall in pension coverage, with just under half (47%) of all workers aged between 20 and 69 years having a private pension in 2015, down from 51 per cent in 2009 and 54 per cent in 2008. Males recorded a higher decline than females in terms of pension coverage, down from 53 per cent to 47 per cent.
Most worrying perhaps, is the low level of pension coverage among so-called “millenials”, with just 14.1 per cent of workers aged 20-24 years having a pension and just over one third (36%) of workers aged 25 to 34 years having one, down from 49 per cent in 2009. Pension coverage was greatest among workers aged 35-44 years, where total pension coverage was 55.3 per cent.
Self-employed people are less likely to have a private pension, at just 30 per cent, and of concern also, is that this figure is falling, down from 36 per cent in 2009 and 46 per cent in 2008.
Affordability (39%) and apathy (22%) were the two most common reasons for workers not having a pension, while some 70 per cent of workers with no occupational pension coverage stated that their employer does not offer a pension scheme. The most common sectors where the employer did not offer a pension scheme for employees were the construction (84%) and accommodation and food service activities (77%) sectors.
The figures also reveal a strong prevalence for non-national workers (29%) to have no private pension, compared to Irish nationals (49%).
Retirement age
As might be expected, the majority of workers (68%) said they would retire between the ages of 60 and 69. However, 8 per cent said they had no intention of retiring.
The self-employed are less likely to retire, the figures show, with more than 25 per cent saying they had no intention of doing so, compared with 5 per cent of employees. Affordability was the most common reason given by one fifth (20%) of self-employed workers for their expected retirement age.
One in five of workers without a pension said they did not know when they would retire, and strikingly, 7 per cent of workers close to retirement age, and aged between 55 and 69, did not know when they would retire.
Source of income in retirement
The figures show a significant increase in the number of workers who will depend on the state pension for an income in retirement. Back in 2009, a little over a quarter (26%) of workers said the pension would be their main source of income - but this jumped to 36 per cent in 2015.
For workers without a pension, a higher number will now depend on the state pension as their main source of income, up from 43 per cent in 2009 to 57 per cent in 2015.
