Hibernian, the Irish life and pension provider owned by Aviva, has published a report today into attitudes towards pensions in Ireland.
The report, The Global Pensions Puzzle, which was carried out by Hibernian’s newly acquired subsidiary Ark Life, compiles recent research and commentary on the pensions crisis in Ireland, and compares this with the situation in France, the USA and the UK.
The report examines responses to the pensions crisis undertaken in New Zealand, Sweden, Chile and Australia. Finally, it includes the results of primary research of the attitudes of 40-60 year olds to saving for their retirement, which confirms that two in ten of this group have no pension plan.
“As a leading player in the life and pensions market, our intention with this report is to add to the debate around finding a solution to the Irish pensions crisis,” says Tony O’Riordan, Managing Director, Hibernian Life and Pensions. “The challenges that Ireland faces are not unique nor, are they as extensive as in some of the other developed economies of the world such as the USA, France and the UK.
The schemes we have examined from New Zealand, Sweden, Chile and Australia each contain positive and negative attributes. While none of these offer a perfect solution there may be some merit in considering elements of one or more of these schemes, for example, the semi-compulsory New Zealand KiwiSaver scheme, which encourages young people to begin thinking about their pension as soon as they begin working. A large part of the Irish pension problem is that so many people defer starting a pension until after thirty-five. Solutions like those examined in the report deserve to be investigated further as they may be valid in an Irish context.”
On a positive note, the report concludes that the challenges Ireland faces are not as extreme as in the USA, France and the United Kingdom.
Issues facing the Irish pensions system highlighted in the report include a low-level of Government investment in pensions (3.2% of GDP compared to an EU average of 12.2%) and an increase of 86% in the public sector pensions bill between 2000 and 2005.
The results of primary research of the attitudes of the middle-aged to pensions and long-term savings detailed in the report include:
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Less than half of this group believe that their pension arrangements are adequate with around 3 in 10 considering their pension plans inadequate and over 2 in 10 saying that they have no pension plan.
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Over 1 million people are in the 40-60 age group, 1 in 4 of the population and this group has grown by 31% in the last ten years
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The highest proportion of people without any form of pension plan are the self-employed
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Over a third of 40 to 60 year olds believe they still have plenty of time to put their pension arrangements in place
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Most Irish people would like to retire before their 60th birthday, but the average expected retirement age is 62.
Hibernian says one of the purposes of the research was to segment the middle -aged into different groups according to their attitudes to savings and pensions. For illustration each group was associated with different animal characteristics:
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Squirrels represent 24% of 40 – 60 year olds. They are secure and confident about their retirement planning with 84% already storing up money in a pension plan.
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Tigers represent 25% of 40-60 year olds. They are aggressively pursuing the goal of building a sizeable retirement next-egg.
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Ostriches represent one in four of the middle-aged population but show distinct signs of nervousness that their pension plans are inadequate but don’t feel that they can do anything about it. 91% believe they should have started saving earlier.
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Deer represent 14% of 40-60 year olds. They seem too worried (or timid) to take positive action about their pension but are also the segment of the middle-aged population least likely to have a pension plan.
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Monkeys represent 16% of 40-60 year olds. They appear to live for today and seem largely unconcerned about future responsibilities. Only 25% of monkeys consider themselves to be a careful person who plans and budgets for things (compared with 78% of the overall age group.) The research was conducted in August 2005 by Behaviour & Attitudes. It comprised telephone-based interviews with a national sample of 400 adults.