Just one in 10 of employees aged between 23 and 60 who are eligible to be signed in the Government’s auto-enrolment retirement savings scheme, were aware of it, according to report from the Central Statistics Office (CSO).
It has been found in the past that around one million private sector employees will have to rely on the State pension when they retire as they do not have an occupational pension or a private one.
The new auto-enrolment pension scheme is to be called My Future Fund, and is due to launched from next September.
Its lunch will be a milestone in the Irish pension landscape.
Over two-thirds of workers in the State have some form of supplementary pension cover, but these are known to be largely made up of public servants.
In a new report on pension coverage in Ireland for 2024, the CSO found that pension coverage is greatest among workers aged 45 to 54 years, at 80pc.
This is up 3 percentage points from 2023.
Pension coverage is lowest among younger workers, with just 27pc of workers aged 20 to 24 years having some form of pension coverage.
Of workers with no supplementary pension cover, more than four in 10 say they never got around to organising it or would organise it at a future date.
For half of those aged 55 to 69 years, affordability was the main reason given.
Today’s News in 90 Seconds – December 19th
The State pension was cited as the expected main source of income on retirement for over half of workers with no pension coverage.
One-quarter had not yet decided how they would fund their retirement.
Only 29pc of employees aged between 23 and 60 who are eligible to be auto-enrolled in the Government’s auto-enrolment retirement savings scheme, were aware of it.
Some 72pc of those employees who are of it would be willing to remain in the scheme.
The launch of auto-enrolment will represent a revolution in the pensions set-up in this country.
Under the scheme, employees will contribute 1.5pc of their gross salary during their first three years of paying in. That will rise to 3pc from the third year on, 4.5pc from year six on, topping out at 6pc from the 10th year onwards.
Employers who contribute to the new compulsory workplace pension scheme will be entitled to receive tax relief – but employees will not be able to claim relief, according to documents released by the Department of Finance this week.
Meanwhile, a single person would need a pension of €33,600 a year to have a “comfortable” retirement, according to a report on Irish retirement living standards released by the Pensions Council.
The council, which was set up to advise the Minister for Social Protection on matters relating to policy on pensions, said a couple would need €43,200 a year to have a comfortable retirement.
In research prepared for the Pensions Council by consultants KPMG, it was found that what is labelled a modest retirement a single person would need a pension of €19,200 a year, rising to €28,800 for a couple.
A modest retirement is said to cover basic living expenses with some room for non-essentials.
A moderate lifestyle, which would offer more flexibility and financial security, requires a pension of €27,600 for a single person and €37,200 for a couple.
The Pensions Council said it recognises the terms modest, moderate and comfortable can be highly subjective and mean different things to different people.
It said: “We also realise that national averages will mask specific circumstances, such as renting in Dublin, material healthcare costs, or travel costs to see children abroad, that would all increase the amounts required to meet each of these subjective states.”
Traditionally, pension savers have often been told to aim for 50pc of their pre-retirement salary.
However, the Pensions Council said that this old rule of thumb can be too simplistic and fails to account for individual lifestyles and specific needs in later life.
