More than half of Ireland's working adults expect to carry some debt with them into retirement. and two in five anticipate that they will still be paying off their mortgage or paying rent after they become pensioners.
That’s according to Aviva’s 2018 Pension Index which says that the trend of older people still facing significant financial commitments in retirement is accelerating.
"The pension index we are publishing today projects a very different retirement outcome than what many people expect," said Ann O'Keeffe, head of individual life & pensions at Aviva.
Aviva says that the threat of poverty looms for retirees in future years, especially as there has been a near 10 per cent decline in the number of people who say they are paying into private pensions. One in every two workers has no private pension, the survey found.
Almost half of those with no private pension say they intend to rely on the State pension for their income in retirement. That represents an increase of more than 20 per cent since the last survey in 2014.
Cease working
Unsurprisingly, only one in five people believe their income will be sufficient when they cease working.
“People know they will not be able to live comfortably on the State pension but yet this isn’t mobilising private pension uptake rates,” said Ms O’Keeffe.
Apart from their own financial commitments, one in three working adults believes they will need to support family members financially after they retire. Funding education costs is seen as the most likely demand on pensioner funds followed by the need to fund a mortgage deposit for family members – especially among people living in Dublin.
Over 60 per cent of respondents agreed with the principle of auto-enrolment, a figure that rose to 77 per cent when the prospect of contributions from their employer was mentioned.
However, asked what they considered an “appropriate” contribution level, the average was 3.8 per cent. That’s well below the 6 per cent level envisaged by Government for these mandatory pension schemes that are due to be introduced in 2021.
“The big question,” said Ms O’Keeffe, “is will auto-enrolment be the catalyst needed to defuse the pension timebomb?”
The survey was conducted in July and involved more than 1,050 people across Ireland.
