37% of Irish People Surveyed Have No Pension Coverage

A stark 37% of Irish people surveyed, in the Friends First Pension Survey, have no pension coverage - with a worrying 51% of those who do not have a pension, planning to rely on the State pension to provide them with a retirement income. A further 36% of those without a pension admit that they have not thought about how they will provide for themselves in their old age.

The current economic downturn is clearly taking its toll, with 59% of respondents without pensions, admitting that they cannot currently afford a pension and a further 23% indicating that they have just not got around to starting a pension.

Commenting on the findings, Simon Hoffman, Business Development Director, Friends First said: “What we are seeing from this research is that the perceived high cost of entry is preventing people from taking the first step in pension provision. People have already cut back on the little luxuries in life and now they are cutting back on real necessities, like pensions. However people need to understand that some pension provision is better than no provision and that putting it off until you think you can afford it means that you will probably not get around to it, until it is too late.”

More than a quarter (26%), of people surveyed, who had a pension, say that they have reduced their pension contributions in the last year – an increase in 6% (from 19% in 2010). Of these, two fifths (40%), have stopped making a contribution altogether. On a more encouraging note, 41% said the introduction of the Government levy had not influenced them, however 23% indicated that the levy has made them less likely to contribute to their pension pot.

Commenting on the findings, Eunan O'Carroll, Sales and Marketing Director, Friends First said: “This research demonstrates that there is a real sense of frustration and a lack of trust expressed by consumers. Clearly, the financial services industry has to do things in a new way if we are to regain consumer trust. Over the next two years it is likely that there will be no Irish-owned Life Assurance companies operating in the Irish market. New market forces will bring change - we need to look at other markets and ways of doing things better, such as the recommendations of the Retail Distribution Review (RDR), in the UK. This industry is at a crossroads and it is now time to establish meaningful dialogue between all stakeholders, similar to the UK, so that we can address the flaws in our business model, in the best interest of all financial consumers.”

It is clear that Irish consumers are facing severe financial pressures and are making tough decisions as a result;

• 20% of people surveyed say they cannot meet all of their monthly financial commitments
• 30% of people said they have taken a pay cut
• 9% of people are working reduced hours
• 34% of people have reduced the amount they are saving
• 23% of people do not have any savings
• 76% have cut back on entertainment and leisure spend

“The Irish consumer is clearly challenged, we as an industry need to consider how we can simplify the pension planning process and how we can help people to save for their future. We need to we get rid of confusion, in favour of transparency so that the beleaguered consumer can have greater simplicity when making big financial decisions,” added Eunan O’Carroll.