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A third of the working population aged between 20 and 69 continue to have no pension coverage outside of the State pension, new data from the Central Statistics Office shows.

73% of those with a supplementary pension said theirs was provided through their work, with 11% holding a personal pension and 16% possessing both.

The lowest level of coverage remains among the youngest age groups, with just a quarter of workers aged 20-24 having pension cover, up from 24% a year earlier.

That compares to around 74% of 55-69 year olds.

Affordability remains one of the biggest impediments to people having a private pension scheme, with 40% of those surveyed saying it is the main reason.

An additional 45% said they had not got around to organise it, or would seek to get a pension in the future.

Among those workers that did not have a pension, 53% said their employer does not offer a scheme.

The data was collected by the CSO in the third quarter of last year.

Defined benefit schemes, where employees are guaranteed a fixed amount on retirement, continue to wane, with the numbers with such a pension falling to 28% from 34% in 2020.

In contrast, the number with defined contribution pensions, where the payments at retirement depend on how much is put into the pot and the performance of the fund, rose to 69% from 64% in 2020.

Nearly half of those workers who do not have a pension said the State Pension would be their main source of income on retirement.

A further 31% said that they had not yet decided what their main source of income would be.

Among occupation sectors, professionals had the highest level of supplementary pension coverage at 81%, compared to 43% of those in the “skilled trades”.

The Government has pledged to introduce a long-awaited system of auto-enrolment, which would see people without a private pension automatically enrolled into some form of scheme.

However, ongoing delays in that process, including as a result of the Covid-19 pandemic, mean the current expected timeline for auto-enrolment to begin rolling out is the end of next year.

Department of Social Protection sources said it is expected that a memo will be brought to Cabinet on the matter in the coming weeks.

Chartered Accountants Ireland said the latest data should prompt renewed momentum towards auto enrolment.

It highlighted again the pressure on the viability of the state pension, amid continued delays to pension reform.

“We have long argued that the sustainability of the State Pension cannot be addressed without parallel reforms to increase private pension coverage,” said Cróna Clohisey, Tax and Public Policy Lead with Chartered Accountants Ireland.

“A clear road map from Government will allow the necessary consultation with employers and business groups to progress. One of the many issues that remains unclear is whether the existing and well-established model for tax relief at both standard and marginal rates for pension contributions should apply to auto-enrolment.”

“In its absence, the operation of two tax systems between auto enrolment and private pension schemes will cause needless tax arbitrage and confusion within the market.”

Brokers Ireland said anyone without a pension who can afford to put some savings aside should do so and not wait for auto enrolment.

“That inaction could lead to people having to depend on the State pension into the future. And that level of income would be way below the expectation of most people,” said Rachel McGovern, Director of Financial Services at the organisation.

“You don’t want to reach middle age and then come to the realisation that you do not have sufficient time left to build a pension that would deliver the kind of income you aspire to.”

She added that the State needs to be planning more urgently for the future, and educating people about planning for retirement.

Article Source – One third of workers still have no pension coverage – CSO – RTE – Will Goodbody

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