THE COMPETITION AND Consumer Protection Commission (CCPC) has expressed its concerns after it found that an increased number of people are planning to retire relying on cash savings, rather than investing in a pension.
A survey carried out by the watchdog found that 1 in 10 people between the ages of 45 and 64 do not have a pension, and pension ownership amongst 45-54 now stands at 76%, compared to 85% in 2022.
1 in 4 of those surveyed who didn’t have a pension said they couldn’t afford to start one.
Grainne Griffin, Director of Communications at the CCPC, said that it is concerning that a significant cohort of people in Ireland are facing retirement without a pension.
She said that it is never too late to start a pension, and that even a few years of saving through a pension can make a difference.
“With the cost of living rising, it’s understandable that some may choose to delay starting a pension. While it’s never too late to start a pension, the earlier you start, the further your money will go. No contribution is too small,” Griffin said.
However, the survey did find that 64% of respondents have a pension, while 69% said they would be happy to pay into a compulsory pension scheme.
Auto-enrolment, where a pension is set up automatically and deducted from wages, is due to be introduced in Ireland in 2024.
The CCPC found that there is strong support for auto-enrolment across age groups, with 79% of under 25s – the least likely group to have a pension – saying they would be happy to pay into a compulsory scheme.
Women are more likely to opt in than men. Just 16% of women said they would opt out of such a scheme.
In light of inflation and the low rate of return on savings, the CCPC said it is alarmed with the increase in people planning to use cash savings in their retirement.
57% of respondents said they would use cash savings to fund their retirement.
The CCPC stated that as pensions are long-term investments and are subject to tac relief, money put into them will usually go further than the same amount put into savings.
Griffin urged people to check their pension, to ensure that they are saving enough to fund the retirement they envision for themselves.
“Reviewing your pension can also save you money. Especially if you have an older pension, you may be paying much higher charges than needed, so it’s a good idea to check your pension now and question any charges.”
“Ideally we would all review our pensions every year, but this becomes more and more important the closer we get to retirement. If you’re retiring in the next 10 years, talk to a financial advisor now to check your pension adequacy,” she said.
Reviewing your pension
The CCPC stated that reviewing your pension ensures that your money is invested in funds that match your appetite for risk.
According to the watchdog, people should be annually looking at different fund options, and what charges are associated with doing so.
People should also assess whether they can increase their contributions, or if they can take out an additional pension product, such as a Personal Retirement Savings Account, or Additional Voluntary Contributions.
You should also know at what age you can draw down your pension.
You can visit the CCPC website to assess your options for starting a pension.
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