Hot Topic #21 - Update 2nd August

More than half of Irish workers rely solely on the State pension

47% of the Irish workforce will only receive a state pension worth €230 per week when they retire, according to the Pensions Authority.

The figures emerge as Minister for Social Protection Leo Varadkar launched a consultation process to assess what reforms are required to streamline the existing complex pension system, and introduce a new universal scheme to provide wider pension coverage.

All workers who pay sufficient PRSI contributions are entitled to the state pension of €230 per week.

Out of the 1.9 million in the workforce, a massive 893,000 (47%) will only have that amount to live on in retirement - and face poverty in old age -  as they have made no provision for a supplementary pension.

A further 730,000 are in occupational schemes where both they and their employer make a contribution.

152,000 are funding a supplementary pension scheme on their own, with no employer contribution.

This means that over 1 million employees - a majority of the workforce - are receiving no pension contribution from their employers over and above PRSI.

Leo Varadkar voiced concern that with a growing older population as people live longer, the pension system will be under considerable strain.

The consultation process will focus first on administrative simplification of the pensions system, including issues like management charges, which can eat into benefits, and the qualifications for pension trustees. The Government is also anxious to introduce a universal supplementary workplace retirement scheme into which workers would probably be automatically enrolled - but would have the right to opt out.

The consultation process will consider a number of options, and Mr Varadkar said he was anxious to build a consensus approach.

However, he noted that introducing a new universal scheme could take ten years.

Observers on both employer and union sides acknowledge that reform is essential.

Do you want to be part of the 47% who will have to survive on €230 per week?

Now is a good time to review your Retirement Planning!

Tax Relief is available on contributions.                     

Have you already an arrangement in place that may need reviewing?

You may already have a personal Paid Up pension, or you may be a member of a company scheme of a former employer which you haven’t looked at for years.

This is your money so it is worthwhile to get advice on how best to utilise it for yourself.

You can contact Michael on 086 8440541 or email info@mkfinancial.ie  for a free consultation on how best to proceed.

Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland