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The Friends First 2016 Pension Index reveals that 1 in 4 (27%) of all adults don’t know how much the State pension is.
Despite the fact that almost half of the adult population (44%) will depend on the State pension as their only form of income in retirement, the lack of understanding about how much income the State pension provides rises to over one in three (35%) amongst those without a private pension.
The vast majority of those without a private pension (73%) stated that they are not confident of having sufficient income at retirement.
As regards private pension ownership, this remains steady at 45% with the majority of people having made no change to their contributions in the past year.
For the first time, the Friends First 2016 Pension Index conducted a cost of living analysis to compare the cost of living now to people’s expected cost of living in retirement to uncover the gap between perceived financial comfort and the likely reality in retirement (see table below).
This Friends First cost of living analysis reveals that:
Commenting on the research, Simon Hoffman, Director of Pensions and Investments with Friends First, said: “Although there has been no real change in private pension coverage levels our research has highlighted two real issues which we urge people to address. It is very clear that there is a huge gap in knowledge when people are setting out their pension goals, with many looking at unrealistic expectations as to what their contributions will deliver at retirement. In conjunction, there needs to be a greater understanding of the role the State pension plays in an individual’s overall pension planning.”
“We are seeing in the study that people are living increasingly busy lives and their focus is less on securing their financial future and more on short to medium term needs. But, sleep walking into retirement can only lead to a rude awakening. Not only is there is a critical need for people to start a pension, it is vital that they are fully engaged with their pension planning and management on an ongoing basis in order to achieve their financial goals in their golden years,” concluded Mr. Hoffman.
Loans of any kind (motor, second home, extension etc)
All home running costs (heating, light, insurance, taxes, etc)
Food and basic living costs
All motor running costs (fuel, taxes, insurance etc)
Education costs for you or a family member
Health costs/health insurance
Leisure costs (holiday, club memberships etc)
Total annual cost of living