17th June 2019 GDPR & Privacy Section

Call Now (+353) 01 829 8500  

Pensions

ipf No Comments

Minister confirms payment rise for 23,000 pensioners who took career break to look after loved ones

More than 23,000 pensioners who had their pensions reduced after taking a career break to care for loved ones have had their retirement payments increased, the Irish Examiner can reveal.

Social Protection Minister Regina Doherty has confirmed that since the controversy erupted in the wake of the Budget 2018 a major review has been undertaken with over 90,000 cases examined.

Ms Doherty has said that her department has examined the social insurance records of approximately 90,000 pensioners, born on or after 1 September 1946, who had a reduced rate State pension contributory entitlement based on post Budget 2012 rate-bands.

The minister said these payments are being reviewed under a new Total Contributions Approach (TCA) to pension calculation which includes provision for home caring periods.

Ms Doherty has confirmed that, as of last week, 47,755 reviews – which is over half of all pensioners identified for review – have been completed.

Of these, 23,523 pensioners received an increase in their rate of weekly rate of pension and 24,232 are remaining on their existing rate of payment, she said.

Based on a sample analysis of some of the increases awarded, the best estimate at this stage is that 13% of those who received an increase received a weekly increase of €30 or more; 36% received a weekly increase of between €20 and €30; 7% received an increase of between €10 and €20; with the highest proportion, 44%, receiving an increase of up to €10 per week.

“Importantly, most of those who received less than €10 following their review achieved maximum personal contributory pension rate, which cannot be further improved upon,” Ms Doherty said.

The Irish Examiner has learnt that reviews commenced from 13 February 2019, the day after she signed the necessary Regulations which, together with provisions in the Social Welfare, Pensions and Civil Registrations Act 2018, allows the increased payments to be made.

Regardless of when a review is conducted, where an increase in payment is due, the person’s rate of payment is adjusted without delay and arrears paid, backdated to 30 March 2018 or the person’s 66th birthday if later, the minister confirmed.

Where a person’s rate does not increase following review, the person will continue to receive their existing rate of payment.

Regina Doherty

The Government will have to find €55m next year to cover the cost of fixing the 2012 pensions anomaly relating to carers who took time out of their careers.

On foot of the controversy, the Government decided to allow State pension (contributory) recipients affected by the 2012 changes in rate bands to have their pensions entitlement calculated on a total contributions approach basis.

The changes included a provision for up to 20 years of a new “HomeCaring credit”. This would benefit people whose work history includes an extended period of time outside the paid workforce, raising families, or in a full-time caring role.

According to the report, reviews will commence in the final quarter of this year, with the first payments being made in the first quarter of 2019. It is estimated the full-year cost will be in the region of €35m.

“Backdating to March 2018 will cost an estimated €20m, resulting in a 2019 cost estimated at some €55m. This is not currently included in the [department’s] 2019 ceiling,” the report said.

by Daniel McConnell

Political Editor

Reference: www.irishexaminer.com

ipf No Comments

Less than half of all employees have a private pension – CSO

Less than 20% of young people were contributing to a pension, compared to more than 70% of those aged 45-54

Less than half of all employees in Ireland were saving towards a pension last year, according to the Central Statistics Office.

Its survey of pension coverage in the third quarter of 2018 found that 47.1% of all people in employment were contributing towards a private pension.

That is up 0.4 percentage points on the same period of 2015.

When pension coverage from previous employments, as well as deferred pensions and pensions in draw-down mode, are included the ratio of those covered rose to 56.3%.

The CSO found that just 16.3% of people aged 20-24 were contributing to a pension, compared to almost 71% of workers aged 45-54.

Meanwhile the data shows that more than half of all self-employed people had pension coverage.

The Irish Congress of Trade Unions said the figures highlighted the need for pension auto-enrolment as part of a wider reform of the system in Ireland.

“Tax relief has failed as a policy instrument for encouraging low and middle-income earners to save enough towards a financially secure retirement, and there is no legal obligation on an employer to provide or contribute to a pension scheme for employees,” said ICTU’s social policy officer Dr Laura Bambrick.

“As the State pension is paid at a flat-rate, rather than earnings-related, workers without retirement savings are exposed to a significant drop in their living standards in old age.”

Reference: www.rte.ie

ipf No Comments

Cabinet agrees bill to allow public servants to work until 70

Public servants recruited before 1 April 2004 face mandatory retirement at 65

The Government has agreed the text of new legislation that will allow thousands of public servants work until they are 70 years of age.

As people are living longer and are in better health, many public servants want to work for longer, but they cannot because of a mandatory retirement age of 65 for those recruited before 2004.

Today, the Minister for Finance Paschal Donohoe brought the Public Service Superannuation (Age of Retirement) Bill 2018 for approval by his Cabinet colleagues.

The bill provides for an increase to age 70 in the compulsory retirement age for most public servants recruited before 1 April 2004.

This group of public servants currently has a compulsory retirement age of 65.

Public Servants recruited after 1 April 2004 are not affected by the changes agreed today as they either already have a retirement age of 70, as they are Single Pension Scheme members, or they have no compulsory retirement age as they were recruited between 1 April 2004 and 31 December 2012.

On 5 December last, the Government agreed that the compulsory retirement age of most public servants recruited before 1 April 2004 should be increased to age 70.

Today the necessary legislation for this change was agreed.

 

The bill is on the priority list of legislation to be published and it is expected to be published in the coming days.

While the new proposal will allow most public sector employees to work up to 70 years of age, they will be still be free to retire at the minimum retirement age if they so wish.

The bill provides for the amendment of all relevant public service pension schemes so that these schemes will allow members to accrue pension benefits on their service between the age of 65 and 70.

It is understood that there is widespread political support for this measure and a Government spokeswoman said: “Staff interests have been consulted and are anxious to have the legislation enacted.”

Reporter, RTÉ Political Staff

Reference: www.rte.ie

ipf No Comments

Why everyone needs expert financial advice

 

We don’t perform surgery on ourselves or extract our own teeth, they say only fools represent themselves in court and yet we make some of the most important and expensive financial decisions of our lives, without ever consulting a financial expert.

Big mistake.

We’ve learned to our cost in Ireland, that overloading on property-based debt can produce not just disastrous outcomes for individuals, but an entire nation.

Even everyday things like buying the appropriate home insurance have led to serious financial hardship for thousands across the country, simply because people don’t always know what they’re buying.

In this case, the unfortunate homeowners will deeply regret not just the flood damage, but not taking informed advice.

Financial advice should be personal

Expert advice is centred on ensuring you get what’s best for you. A financial advisor can help you connect the dots between a good plan and the right products – all with an impartiality that’s impossible to achieve on your own.

And, if your personal circumstances or the markets hit a wobble, they can provide the calming rationale you might need to turn things back around.

If we’re lucky, our first lessons in the art of money management start in childhood.

We’re given a piggy bank for pocket money and in time, it’s transferred into a child-friendly savings account in the post office, credit union or local bank and the life-long ritual of saving begins.

By the time we start earning our own living, we’ve hopefully managed to open a current account or arrange a small personal loan, without making too many mistakes.

Yet, under time pressure and most likely transacting online, how many of us shop around for the best terms and conditions when it comes to financial products?

It’s fair to say, the average young working adult will now spend more time researching their next smart phone than their first pension, despite the fact our financial lives are becoming more complex.
That’s something we really need to redress.

Financial decisions deserve our time and attention

A cavalier approach has no place when it comes to 30-year mortgages, insurance that protects the people and possessions we value most, and pensions that determine how we will spend the last quarter of our lives.

How many people fully understand the asset allocation that sits behind their pension, how tax relief works or even how to claim their retirement income come the time?

Very few is my guess, but here’s the thing…that’s okay, provided you get the advice you need.

Be planned and be practical

The earlier you strike up a relationship with a good independent advisor, the better.

That might be when you join an occupational pension plan, start investing, get married or buy your first home. And of course, starting a family will take you into a whole new world of financial challenges.

Good financial advice can help with all of that.

At its most basic, the role of an investment advisor is to create a realistic plan that will help you reach your financial goals. They can help get you there too, with practical advice on how to increase your income, budget better, invest wisely and sense check your spending priorities.

One of the greatest dangers of taking a DIY approach is that you never get an objective view of your financial position that includes all the bells and whistles, like income, tax, spending, saving, debt, assets and liabilities.

There’s no synergy between piecemeal actions and as a result, you end up reacting to events rather than planning for them. That means you’re also more vulnerable to short-term crises and run the risk of getting sucked in by headlines and hype.

With a neutral, informed voice at the other end of the conversation, you’ll be reminded there’s a tailored plan in place, allowing you to remain focused, resist the temptation to take unnecessary risks and make better financial decisions generally.
Now, what part of that doesn’t make sense?

Reference: www.irishlife.ie, Jill Kerby, Personal Finance Journalist.

ipf No Comments

Mind the Gap: Women’s attitudes towards pensions must change

To close the pensions savings gap we need to raise awareness of the importance of saving as young as possible for both genders, but particularly for women.


We want young women going into the workforce with a really clear view of what they need to do to get to their retirement

Women are far less likely to save for their retirement than men, according to new research carried out by Aviva. The research shows that men are much more aware of pensions and the benefits of saving.

This is partly a legacy issue arising from the marriage bar which, until it was abolished in 1973, forced many women to leave the workforce when they got married. But women also tend to take more career breaks either to have babies or to care for young children or elderly parents.

On the other hand, women live longer and without income from pensions to supplement welfare payments, they are more vulnerable to poverty in their retirement, says Aimee Scriven, retirement solutions proposition manager at Aviva.

“Women’s attitudes towards pensions need to change. We want young women going into the workforce to have a really clear view of what they need to set aside throughout their working lives to enjoy a decent standard of living in their retirement,” she says.

Calculate your own pension gap – click here to go to the pension gap calculator

The research, which was carried out by Ipsos Mori as part of Aviva Ireland’s Consumer Attitudes Survey, found that almost half of women, as against just 27 per cent of men, say they don’t understand pensions and investments*. A quarter of women admit they haven’t considered how much they would need for a comfortable retirement and yet they worry about not having enough.

“In comparison to 25 per cent of men, almost 40 per cent of women are worried they won’t have enough money to provide an adequate standard of living in retirement. But despite their worry, only 8 per cent of women are taking steps to do something about this as against 25 per cent of men*,” she says.

Aviva published its ‘Mind the Gap’ Pensions’ Report last year which found that Ireland’s annual pension savings gap (that’s the amount of money people are currently saving for their pension versus the income most likely needed to provide an adequate standard of living in retirement), increased from €20.2 billion in 2010 to €27.8 billion in 2016. This means that Ireland has the joint-second largest pension savings gap in Europe**.

Raising awareness among women about the need to prepare for retirement is a must in order to encourage people to close that gap, says Scriven.

“The pension gender gap is caused by a number of factors: women are more likely to take career breaks, for things like maternity leave. Another factor is that almost 70 per cent of part-time workers in Ireland are women. That has a huge impact on their contributions to any kind of occupational scheme and also, on their entitlement to the contributory State pension as well,” she says.

She says some women still hold an old-fashioned notion that they can rely solely on their husband for financial security. “A lot of women in their fifties are in that space and are possibly thinking there is no point in doing anything about it now, that it’s not going to make any difference, starting to save towards a pension. We would say absolutely not, saving for five years is better than saving nothing.

“If I look to my own family, my grandmother had nothing to do with the home finances, then to my mum who might have had a bit more to do with it. But she never worried about a pension as that was my dad’s job, to earn the money and bring in the pension. I am in my very early thirties and I’m very much more clued in about pensions and I’ve been saving into mine since I was 18.”

Scriven says younger women do think differently when it comes to pensions but more needs to be done to inform the next generation. She says children need should be taught in secondary school about the importance of forward planning and saving for their future.

“We need to start the education process around pensions at a much younger age for both genders, but particularly for females. The world has changed and women are much more self-sufficient and independent. Things like how long they take out of the workforce for maternity, that’s never going to change, so it’s the things they can do to help themselves and to be mindful of that when they’re thinking about what retirement is going to look like for them.

Ann O’Keeffe, Aviva’s head of Individual Life and Pensions welcomes the recent announcement by the Taoiseach, Leo Varadkar, that a system of auto-enrolment in a pension scheme for all private sector workers will be in place by 2021.

“As we pointed out in our Mind the Gap Report, such a move will raise the level of coverage across the population. But the devil will be in the detail: we look forward to further information when the Government publishes its five-year Pension reform roadmap before the end of the year. It is important that the level of contributions to the proposed universal scheme should be adequate to fund retirement for private sector workers, men and women alike.

“Thankfully, we are all living longer, more active lives and our good fortune in this respect should not become a financial burden. That is why we need to ensure that women – as well as men – understand the benefit of financial planning as early as possible in their careers. It is the responsibility of all of us who work in the pensions’ industry to ensure that we play our part in educating women about pensions,” she says.

Reference: The Irish Times

ipf No Comments

Sustainability of pension system cause for concern

After the Budget there was lots of focus given to the anomaly in the State pension system that left many workers – most of them women – with less money than they might otherwise have been entitled to. However a new report suggests that that is just one of the issues facing the pension system here, with its sustainability in particular being flagged as an area of concern.

The Melbourne Mercer Global Pensions Index ranked Ireland 12th out of a survey of 30 countries, but the country got a D grade in terms of sustainability.

“We actually rank third out the 30 countries in terms of the adequacy of benefit that the system is targeting but we’re 20th in terms of sustainability,” said Peter Burke, senior defined contribution consultant at Mercer Ireland. “There are a few factors that go into that – one being the coverage level of private sector savings in relation to retirement and the other would be the fact that we’re living longer so any pension needs to be paid for a longer period of time.”

That creates a particular pressure on the State pension, he says, as the system is on a “pay as you go basis”. That has worked in the past because there have always been enough workers to spread the cost of retirees – however that balance may shift as the population ages and the ratio of employees to pensioners narrows.Those issues – and other shortcomings – have led to a significant financial hole within the Irish pensions system – something that will take hundreds of billions of euro to address, according to Mr Burke. “At the moment the research is pointing towards a figure of about €560 billion in terms of the pensions savings gap in this country,” he said. “Every year that we allow this challenge to remain as it is, the problem is just getting worse.”
One of the current problems with pensions is the fact that – at the moment – they are particularly unattractive to people due to low interest rates and the potential for low returns. As a result many will see the little gain they might make being gobbled up by fees – leaving them with little incentive to save further. Mr Burke said there is more companies can do to address this – which might make a pension more attractive to individuals.
“There’s always something that can be done in terms of fees and obviously there’s competitive pressure in the market that will reduce fees further,” he said.

However any solution to the pensions problem needs to go beyond this, he added, and include some kind of auto-enrolement system. This would oblige employers to add staff into a pension scheme automatically, which would help to boost the numbers saving for retirement in the State. “It’s where there’s a legislative change whereby the employer not only has to set up a certain minimum qualifying pension scheme but then has to enrol employees into it,” he said. “At that stage employees have the opportunity to leave that pension scheme – no-one is going to force anyone to save for retirement but the experience we’ve seen from other countries is that people tend to stay within these systems through natural inertia and that will increase the coverage level for private sector schemes and, overall, improve the sustainability of our system,” he added.Reference: www.rte.ie

ipf No Comments

Retire and stop? Not in the future says pension forecaster

As the way we live changes so will our pensions, but planning for a reimagined pensions future is more important than ever

“[In the future] we expect that our approach to retirement will become much more flexible. Instead of just ‘retire and stop’ people are likely to continue working as long as they can, perhaps slowing down, but not simply ‘stopping’ work,” says Klaus Mogensen, a futurist with the Copenhagen Institute for Futures Studies in Denmark.

As more lifestyle opportunities become inexpensive or free, thanks to the internet, life choices in later life will change also. “If you are not focused overly on such material matters as a big house or car, you will be able to live a rich life fairly inexpensively, by perhaps not taking holidays to exotic destinations, but holidaying in your own country, and by availing of things like online education which will be free or inexpensive,” he says.

Indeed, we may become less acquisitive generally. “A lot of futurists are saying we will soon reach ‘peak stuff’ in terms of material consumption,” said Mogensen. “What makes a life interesting is not ‘stuff’. It is access to material wealth that will become more important than owning it.”

The “sharing economy” will see people not own cars, for example, but subscribe to them on a service basis.  “We can feel liberated by giving up the stuff we own, because stuff ties you to one place,” says Mogensen, who identifies the trend as ‘freedom from ownership’. “In the past we used to talk about freedom from want.  In the future we will be able to have access to things without owning them.”

That could have a knock-on effect on property. “You won’t need a big kitchen if you’re going to eat out all the time, you won’t need a big sitting room if you are going out to socialise with your friends and you won’t need a big TV if you can watch on your mobile devices,” he says.

Such trends could liberate us from the tyranny of home ownership, in which “so much of our income and savings is tied up.”

There are negatives too, primarily a growing polarisation between the rich and poor, he cautions, “Both the UN and the World Bank have flagged this polarisation as a growing problem. We might see some political measures to limit this polarisation. One possibility is the advent of a Universal Basic Income, an idea that is currently being considered in Finland and Switzerland.

“If it does come, there will not be a retirement age because you will get the Universal Basic Income at every age,” he says.

Denmark is currently considering the idea of providing access to the State pension early for people worn out by hard physical labour, while others, say professionals or creatives, whose work is less taxing, could hold off before applying for the State pension, and so get a higher rate at a later stage.

The further we get from the industrial age, the more attitudes towards retirement are likely to change, he says. “People in creative industries, for example, tend to like their work. For them it is not just a means to get money, they find it interesting.”

Automation will give routine jobs to the robots, leaving only the interesting ones for their human overlords, he posits. “The trend generally over the past 150 years has been to reduce working hours. If this continues, we can expect to work less and have more time to enjoy the wealth we have,” he says. “And with the growth of free and inexpensive resources (delivered via the cloud) time might become the greatest luxury. In Denmark already we have seen unions successfully start to negotiate for more time off rather than for more money. Two-thirds of Danish workers have negotiated six- rather than five-week holidays.”

Another trend is longevity. “If you retire at 70 pretty soon you can expect to have another 25 years of life. Your kids could possibly expect to live even longer. If that is the case, retirement savings won’t last that long and public retirement funds won’t cover that either. We are going to have to increase retirement age to afford longer living.”

The whole notion of retirement is undergoing “massive transformation at the nexus of socio-economic change and technological disruption,” says Kyle Brown, a senior foresight strategist with Idea Couture, a strategic design and innovation firm in Toronto.

“Automation, information communications technologies and artificial intelligence are challenging the industrial economic model and even our knowledge economy, with innovations in process efficiency and cognitive capacity that are ultimately resulting in labour market displacement,” he says.

“At the same time, advances in life sciences are increasing human longevity. Most Western societies are also beginning to feel the consequences of the passing demographic bulge, with several states being forced to address an increasingly unfavourable age-dependency ratio,” he says.

This new 50+ is healthier and more active than ever, meaning they will likely work longer

“As a result, new ways of working are emerging, which require us to rethink and re-imagine the linear approach to education, employment, and retirement. Rather, these three states are becoming more fluid and dynamic, characterised by increased precariousness and task-based, project-oriented work that is supported by just-in-time lifelong learning – as opposed to just-in-case learning,” he says.

The idea of a second career represents an opportunity for passionate engagement after retirement that not only creates a sense of purpose for the elderly, but creates benefits for the wider community, he says.

The attitudes and behaviours of elderly populations today and in the future will be different than generations past. “This new 50+ is healthier and more active than ever, meaning they will likely work longer and actively participate in society to a greater extent than before,” says Brown.

“Having grown up in a time of relative economic prosperity – from a Western-centric perspective – their expectations for retirement will be wildly different than in the past, especially given their financial privileges and disposable income. There is a new silver economy emerging that ranges from functional products and services to transformative experiences,” he says. Looks like the future isn’t golden but silver.

www.irishtimes.ie 14/10/2017

ipf No Comments

Women fear they won’t have enough to fund retirement

Large numbers of women are worried they will not have enough money when they retire, with fewer men concerned about a funds shortfall.

Most women are unsure of how much they will need for a comfortable retirement, according to research from pensions provider Aviva.

It showed a huge gender gap in Ireland when it comes to preparations for retirement.

But the survey, carried out among 1,000 adults by Ipsos Mori for Aviva, found that just 8pc of women say they are taking steps to ensure they have an adequate level of income during retirement.

Around a third of women say they are not setting aside money for retirement on a regular basis. Just 18pc of men are failing to prepare for retirement.

A quarter of women have given no consideration to how much they would need to live comfortably in retirement. The comparable figure for men is 14pc.Four out 10 women say they don’t understand pensions, compared to 27pc of men.

Head of life and pensions at Aviva Ann O’Keeffe said the gender pay gap was getting a lot of attention.

“But we also need to focus on the knock-on effect of this pay gap on pensions, given its implications for the welfare of our ageing female population.”

She said the gender pension gap was hardly surprising, given that women earn less than men.

“It is worrying that women are so unprepared and lacking information on how best to prepare for their retirement,” she said.

Ms O’Keeffe encouraged all workers to start saving as early as possible and to not opt out of any workplace pension scheme.

Reference: Independent.ie

ipf No Comments

9 Financial Habits Every 30-Something Should Have

 

As a 30 something, the best time to start thinking about your retirement and future financial security is… well….yesterday.

Of course, it’s not the most exciting topic when you’re young and have to consider things like mortgages, weddings and children, which require more urgent financial attention.

The reality is, however, the sooner you embrace the, the better. Not only will it take one of those big ‘life admin’ weights off your shoulders, but an early start brings great benefits.

State pension age is on the increase (set to be 68 after 2028), as is our life expectancy. Irish men and women are expected to life to 78 and 82, respectively and surviving for that long on the current state pension personal rate of €230.30 per week, seems like an unimaginable stretch.

So if you’re new to the world of retirement planning and feeling a little bit more ready to get started, here are some things you can do now that your older self will thank you for.

  1. Know where you currently stand

Pensions seem complicated when you don’t know anything about them, but there’s plenty of information online and it’s always worth asking those around you too. The most important thing to know, when you’re getting started, is whether you have or are eligible for a pension and what the contributions are. If you are in the public sector, you’ll be covered by the public sector pension but if you work in the private sector, this may be more unclear. If you’re unsure, talk to your employer or HR department to understand your current position.

Calculator and notebook

If there is an option to join a company pension scheme, you should strongly consider this, as it’s basically free money for future you. Take an interest in the scheme and understand your contributions. It might automatically be set to a minimum of 1% of your earnings. If you feel like you can increase this, you should.

  1. Calculate and set a budget

Once you know where you stand, the next step is to figure out exactly how much you need to put away each month to secure the kind of comfortable future you want after retirement age. Irish Life has a very handy pension calculator which will take you through everything. All you need to know is your annual salary and basic information about your existing pension, if you have one.

It can tell you how much you need to save on a monthly basis to reach your goal. By having this information in front of you and knowing how much you need to save, the reality of retirement planning will seem a little bit easier to take on.

Set budget for retirement

  1. Set up a pension

No matter if you have all the savings in the world it’s still worth having a pension, as a pension receives income tax relief, if you’re eligible. This basically means you’ll pay less tax if you have money in your pension. For example, if you invest €100 in your pension, you’ll get €20 off your tax bill. And the relief is even greater for higher rate taxpayers.

If your employer is matching your pension contributions, you should contribute as much as you can to benefit fully from this.

  1. Pay off your debts

Retirement planning is not just about setting up and having a pension. Having control over your current finances will help stand you in better stead in later life.

If you have any debts, make it your priority to clear all of these before you do anything else. Start with the ones with the highest interest rates first as they’ll be costing you most, longterm. From there, try to avoid when possible, purchasing items on credit or getting loans that you don’t absolutely need.

online banking

  1. Ask for more money

It’s not a conversation that anyone wants to have but if you don’t negotiate your salary, you’re not only undermining your potential income but your savings too. Having an extra €100 or more per month to put towards your savings can make a significant impact on your financial security in later life.

  1. Save as much as you possibly can

Even though buying that new pair of shoes may seem more appealing, it is worth saving as much as you can, while you can – before you have to come to terms with the big life expenses such as mortgages and weddings and your money has to stretch much further.

Every time your wage increases, or if you manage to clear a monthly expense, put this towards your savings. If not, you’ll find you’re just unnecessarily spending this extra cash with nothing to show for it.

Save money - piggy bank

  1. Consider investing

For most people entering into the world of savings and investment for the first time, setting up a pension is often the first step. But once you have that set up, it might also be worth considering other investments to add a little bit extra to your pockets, so you can afford to put away extra for your retirement. Of course, with investment, there is greater risk but there’s also greater reward. We have some great investment information and resources at IrishLife.ie to suit investors of all types and levels of experience.

  1. Buy a home and buy wisely

We know, we know – in Ireland, this is much easier said than done, as the average age of first time buyers has risen to 34.

But if you have the chance to get a foothold on the property ladder, buying a home is a solid investment for your future, retired self. If you manage to pay it off well before retirement age, you’ll be able to save more and will have considerably less expenses. If you’re buying a house that you don’t currently want to live in, but want to rent out instead, consider if it may be somewhere you could comfortably settle later in life, for greater practicality.

House

  1. Talk to a professional

To maximise the potential of your retirement plans, it’s always best to talk to a professional who understands pensions, investments and savings inside out and can give you the best advice. At Irish Life, we have hundreds of thousands of pre-retirement pension customers in Ireland so we have a detailed understanding of how to cater for customers of varying needs and levels of expertise when it comes to finance.

As much as taking to friends, family members and colleagues can help guide you, discussing your situation and your goals with a professional will give you that extra bit of confidence in your decisions.

Reference: Irish Life

ipf No Comments

Charlie Weston: Ten things women need to know about pensions

Females will have 38pc less than men to live on at retirement

Stock image

Women get a raw deal on pensions. Fewer of them work outside the home, and they often get paid less when they do take up paid employment. Many work only part-time.

All this means that the gender pay gap feeds into the pension issue. So when they get to retire they typically have a third less to live on than men.

A pensions gap of 38pc exists, according to the Irish Human Rights and Equality Commission.

But there are ways women can make the best of a bad situation by ensuring they maximise the value from the State pension, and any supplementary scheme, whether they are in the workforce or not.

Here are 10 things women need to know about pensions.

1 The State Pension

The State contributory pension is regarded as relatively generous. For those who have 48 annual PRSI contributions, the weekly payment is €238.30. This is the payment for people who qualified for pensions before September 2012. You get it from the age of 66. The means-tested State pension non-contributory is a payment for people aged over 66 who do not qualify for a State contributory pension or who qualify for only a reduced contributory pension based on their insurance record.

2 But women often get less than men

Women are losing large amounts of money from their retirement payments due to austerity cuts. A recent report from Age Action estimated that 23,000 females have been hit with lower payments due to changes to State pension eligibility rules in 2012.

Changes made by the previous government make it more difficult to qualify for a full pension. On average, retired workers have lost more than €1,500 a year, with women suffering the biggest hit, according to Age Action.

In 2012, the then-government changed the eligibility criteria for the contributory State pension. It moved to an “averaging rule” to calculate the number of contributions made by a worker.

“Under the old system, if you had an average of 20 contributions a year, you would be entitled to €228.70. But after 2012, this dropped to €198.60, a cut of more than €30 each week,” Age Action’s Justin Moran said.

3 Homemaker scheme worth checking out

The homemaker scheme makes it easier for women who have spent time outside the workforce caring for children to qualify for the contributory State pension. The scheme protects your contributions by disregarding any years spent providing full-time care for a child under 12, or a disabled person over the age of 12.

Read More: ‘I have 20 years of work left … I can afford some risk’

Up to 20 years can be disregarded when the yearly average number of contributions for a contributory pension is being calculated, which can help you qualify for State pension, or a higher rate of pension. Typically, you won’t have to apply for it. If you are already claiming child benefit, carer’s allowance or carer’s benefit, or a respite care grant, you will automatically be entitled to it.

4 Low pension coverage among women

Just a third of women own a pension, according to research. This means that two-thirds of women do not have a supplementary pension. This is despite the fact that women make up almost half of the workforce. Men are much more likely to have a pension. Part of the problem is that women are far less likely to discuss retirement planning with friends.

5 Most women don’t know how to start a pension

A worrying 71pc of women don’t know how to start a pension, according to a survey commissioned by Standard Life. There are two options in the private sector. If you are a PAYE employee your company may have an existing occupational pension scheme. Typically, the employer makes a contribution to this on behalf of the employee.

Large companies often contribute between 5pc and 9pc of annual salary to the pension. If you are earning €50,000 a year this works out at between €2,500 and €5,000 a year. Alternatively, the employer has to offer you access to a pension scheme even if it doesn’t contribute to it. That’s the legal requirement and has been for the past 15 years. Most women are unaware of this extremely important point, according to Aileen Power of Standard Life.

6 the Pension age has gone up

The State pension is now 66, up from 65 previously.

For those retiring from 2021 on it goes to 67.

For those retiring from 2028 the State pension will not be paid until 68.

However, many employers are still sending employees into retirement at the age of 65.

That is why the Citizens’ Assembly called recently for the abolition of the mandatory retirement age.

7 You may have to work until you are 70

People should not get the State pension until they reach the age of 70, a State-supported think tank has recommended. Moving the statutory retirement age to 70 would counteract a fall in the workforce and the rise in the number of pensioners, the Economic and Social Research Institute said recently.

Read More: ‘I wanted to retire by 50 so I could enjoy life. My advice? Start saving’

The chances are that this will be introduced. Currently, there are around six workers for every pensioner. Over the next 30 years this is due to fall to around two workers for every pensioner, adding to the costs of State pensions.

8 Maternity leave should not affect pension rights

If you get maternity benefit, you will get State pensions credits automatically. But this ends after 26 weeks. This means that if you take further unpaid leave, you will need to get your employer to complete the application form for maternity leave credits when you get back to work.

If you are taking parental leave, you should also be entitled to credits. But you have to apply for these.

9 You may get a spouse’s pension

If you are married but do not qualify for a pension, you may be entitled to what is called a “qualified adult” pension. This can be up to €213.50 for those over the age of 66. The payment is means-tested.

However, the concept of women being dependent on their husband in retirement is not appealing for women. If your husband has died and was a member of a defined-benefit pension scheme, you are likely to be entitled to a spouse’s pension, usually half the amount he got in retirement.

10 Pensions adjustment order

A court may make a pension adjustment order in the case of judicial separation, divorce and dissolution proceedings. This designates part of the pension to be paid to a spouse and dependent children.

The judge decides how much of the pension should be designated, according to the Courts Service.

The effect of such an order is that the designated part of the pension remains in the pension scheme but is payable to a spouse and children when the other spouse reaches pension age or dies.

Reference: Irish Independent

Top