With the weekly state pension at just €223.30 per week consumers in Ireland are more worried than ever about having enough money to buy staple goods like food and clothes in retirement.
- 54% of retirees regret not starting a pension earlier in life- new research from Hibernian
- 59% worried about having enough for "adequate" standard of living
- 55% prepared to work after the usual retirement age
- 61% would like more advice on how to manage their personal finances
With the weekly state pension at just €223.30 per week consumers in Ireland are more worried than ever about having enough money to buy staple goods like food and clothes in retirement. New research from Hibernian shows that almost six in 10 consumers in Ireland are worried that they will not have enough money to fund an "adequate" standard of living when they retire. Hibernian's survey of almost 1,000 consumers in Ireland also shows that 54% of current retirees in Ireland wish they had done something earlier to provide for their retirement and regret not having started a pension earlier. Highlighting the lack of financial preparedness, 61% of respondents to the Hibernian survey have also admitted that they would like more advice on how to manage their personal finances.
And while retirement is always seen as being a long time away, by 2036 one in five people in the population will be at retirement age. That is anyone who is just 37 today. An analysis by Hibernian Life & Pensions also shows that delaying taking out a pension by just a few years can reduce the size of a retirement fund by as much as half and will also see generous annual tax benefits disappear (see table below). This is particularly important for the self-employed who face the 31 October deadline to pay and file with the revenue.
One of the side effects of not having enough to fund their retirement is a longer working life. And the Hibernian research shows 55% of people are prepared to do just that to fund their retirement. However by taking the right financial advice, these issues can be overcome leading to a more balanced and relaxing lifestyle after the normal retirement age of 65.
Speaking about the Hibernian research findings, Mark Reilly of Hibernian Life & Pensions said: "Obviously the financial market turmoil is a cause of serious concern for a lot of people and the feedback we have been getting in Hibernian is that consumers are clearly nervous about investing at the moment because of this turmoil. However by not investing in a pension early enough retirees may be forced to live a very frugal lifestyle. Many will have just the state pension of €223.30 per week to live on or the equivalent of about €12,000 per year and will find it challenging to purchase just the basic requirements like food, clothes, light and heat."
Hibernian's Mark Reilly added: "When you're young a few extra euro invested for the long-term makes a significant difference. For example, at age 25 a contribution of €300 a month can grow to almost €680,000* when you retire. But if you decide to wait another 10 years and start investing in your pension at age 35, the size of your retirement income based on the same monthly contribution decreases by half to just over €330,000*. So the sooner you start saving for retirement the better, and for the self-employed, remember the 31 October deadline from the Revenue to maximise the tax benefits of investing in a pension."
To help consumers avail of the generous tax benefits from taking out a pension but still protect themselves from the current financial market turmoil, Hibernian has launched the Hibernian Safe Haven Fund. The Hibernian Safe Haven Fund was specifically designed to offer customers a distinct stepping-stone to investing in equity markets while also maximising the tax benefits of taking out a pension. The first step enables customers to start a pension and place their funds on secure deposit with a guaranteed return of ECB + 1% until September 2009. Customers can then take additional small steps toward investing in a range of Hibernian equity market funds as their confidence in investment markets returns to normal levels.
Mark Reilly of Hibernian said: "Self-employed people typically have a higher tolerance for risk as evidenced by their decision to leave behind paid employment and start their own firms. Central Statistics Office (CSO) figures also show that just 46% of the ‘self employed' have a pension. This compares unfavourably with the national average of 54%. With Hibernian's Safe Haven Fund we are living up to our promise of helping the self-employed achieve peace of mind and prosperity and in the process we are also helping them reduce their tax bill. "
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Note to editors:
*Table 1 - Pension Maturity Values at National Retirement Age 65:
| Age | Estimated Maturity Value at NRA | Providing a Yearly Pension of |
|---|---|---|
| 25 | €679, 059 | €37, 114 |
| 35 | €332, 135 | €18, 567 |
| 45 | €145, 161 | €8, 299 |
- Figures and table above (Table 1) are based on the assumption that €300 monthly contributions are invested in Hibernian Horizon Plan, at 6% growth and 3% contribution indexation. Figures are for illustrative purposes only and are not guaranteed. Actual investment growth will depend on the performance of the underlying investments and may be more or less than illustrated.
- Research carried out by ESOMAR accredited fieldwork agencies and included a total population of 28,525 people across Aviva's markets including Ireland. The Irish sample base was 997 respondents
- Details on pension coverage nationally were drawn from the Central Statistics Office Quarterly National Household Survey Pensions Update dated 4th Sept. 2008.
- Hibernian is one of Ireland's largest and most successful financial organisations with activities spanning general insurance, risk management, pensions, life assurance, health insurance and personal financial services.
- Hibernian is owned by Aviva plc, the world's fifth largest insurance group.
- Hibernian's full year results for the year ended 31st December 2007 produced an operating profit of €352.9m (2006: €188.9m).
- Hibernian occupies the number one position in the General Insurance market and a top three position in Life & Pensions and Health Insurance.