Private pensions research results from Aviva

Almost half of pension savers don’t have a clue how much it will provide in retirement according to new Aviva research

Almost a quarter of individuals with no private pension believe the State pension to be higher than it is

Only 21% of those without a pension are looking forward to retirement

A new survey focused on pensions and retirement from Aviva Life & Pensions Ireland DAC (Aviva) has found that almost half (46%) of those with a pension don’t have a clue how much it will give them in retirement.  Some 35% of those surveyed who have a pension said they receive an annual statement from their employer on an annual basis, while 11% said they have a financial advisor who provides them with regular updates.

The research also revealed that 61% of people who don’t have a private pension are unaware as to how much the State pension is on a weekly basis.  While 38% believed it to be slightly less than the €248.30 per week, almost a quarter (23%) think it is more, with some suggesting it is as high as €302.30 weekly.  However, the research findings show that awareness as to the exact amount of the weekly State pension amongst those with pensions is only marginally higher at 46% as against the 39% who have no private pension provision.

The survey conducted by iReach Insights of 1,400 people nationwide on behalf of Aviva with the research findings also revealing that just over half (54%) of those surveyed who had a pension are aware of the percentage of their pension that they can take tax free on retirement.  Of the 46% who estimated the 25% tax free lump sum incorrectly, 20% thought it was up to as much as 45%.

Some 58% of those who have a private pension claimed that they are looking forward to retirement.  This is in sharp contrast to those who don’t have a private pension, with only 21% of them saying that they are looking forward to it.  Those aged 55+ are most looking forward to retirement at 59%. Unsurprisingly, 60% of those without any private pension have never really thought about retiring, with 26% of respondents who have a private pension saying the same. 

The research further probed if people have given consideration to their financial plans for their retirement with 23% of those surveyed claiming they that they have given a lot of consideration to it.  This was higher amongst men at just over 29% rather than woman at only 18.3%.  While some 39% admitted to saving a little, they also acknowledged that they need to give it some more attention.  However, almost a quarter (24%) of respondents said that they don’t have the financial capacity to put anything aside.  Some 14% of respondents said that they have never really thought about it, highest amongst 25-34-year-olds at almost 26%.

The research findings from the survey highlight that even those who have made some provision for their retirement may be lulling themselves into a false sense of security by not understanding what their pension savings will actually deliver for them. In light of the Government’s current focus on the sustainability of the State pension and the very likely increase in the age at which individuals may avail of it, the issue of pension adequacy for those in employment is even more important if they are hoping for financial security in retirement. This is even more important now as people are living longer, more active retirements and this needs to be factored into individual’s financial plans.

Stephen Rice, Aviva Ireland

The survey findings also revealed that 47% of those aged 35-54-year-olds said that, while they are saving a little for their retirement, they know they need to give it more attention.  However, 12% of that age cohort have never thought about their financial plans for retirement, with 23% of them saying that they don’t have the financial capacity to make plans.  This figure is just over 20% for those aged 55+ and is again linked to not having the financial capacity to do so.  Given Ireland’s inflation rate is expected to be 2.5% by the end of this quarter and, with most financial institutions providing zero interest on savings accounts, individuals may benefit from investing some of their deposits into a pension where they will benefit from the generous tax relief that is available on pensions savings.  Financial advisors can play a key role here providing advice and, more importantly, clearly outlining to people exactly how much their pension savings will provide in retirement”, concluded Stephen Rice.

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Aviva Group Services Ireland Limited, a private company limited by shares. Registered in Ireland No.322579. Registered Office One Park Place, Hatch Street, Dublin 2.