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Dublin: 2 °C Wednesday 21 March, 2018

"It's a pensions time bomb" - 1 in 5 people stop contributing to their pension

More than two thirds of people surveyed have a pension – but many are finding it too difficult to keep up with monthly financial commitments.

The survey found a significant number of people are not prepared for their retirement
The survey found a significant number of people are not prepared for their retirement
Image: Leon Farrell/Photocall Ireland

ONE IN FIVE people who have a pension have reduced or stopped completely the amount of money they contribute towards it, a new survey has found.

The survey also found that 21 per cent of people are currently unable to meet their monthly financial commitments.

The figures have been described as a “pensions time bomb” by one expert who said that people will become more reliant on the State pension for retirement income.

The Friends First annual pension survey found that many of the 67 per cent of people who have a pension have been forced to cut back on the amount they contribute due to the tough financial climate as many household budgets are cut or put under pressure.

Around 10 per cent of people have stopped contributing to their pensions altogether.

“This research suggests that we are working our way towards a pensions time bomb,” said Simon Hoffman of Friends First.

Financial pressures on Irish families continue to hamper people’s ability to save and meet their monthly commitments. With a new property tax on the way, householders are going to be faced with an additional financial challenge at a time when they cannot take much more.
As a result more and more people will become reliant on the State pension for their retirement income. However, recent reports show that the State simply cannot take any additional strain as it already faces a €324 billion pensions shortfall.

The survey of 1,001 people across the country was carried out by Empathy Research among people between the ages of 25 and 55.

National Tracing Service

Separately, the Irish Association of Pension Funds has warned that the high numbers of people emigrating and moving between jobs will make it difficult for companies to pay out pensions when former employees hit retirement age.

The IAPF has called for National Tracing Service that would allow employees to trace their benefits as they move around.

A spokesperson for the IAPF pointed to the construction industry which has seen thousands of pensionable employees made redundant or emigrate, making it difficult for pension trustees to find them in future.

James Kavanagh of the IAPF said that the Irish workforce is far more transient than it was two decades ago.

Read: One third of pensioners in one Irish county live on their own – census >

Read: Guineys workers told: 30 years service? Sorry, no pensions >

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