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Mind the pension gap

LACK OF PENSION PROVISIONS AMONGST YOUNG WOMEN SIGNALS FUTURE OF FINANCIAL DISEMPOWERMENT

  • 63% of women admit to having no pension provision
  • 55% of women have never considered a pension
  • Men are more proactive and confident than women about their retirement income
  • Insights point to a pension pay gap of (10%) for future female retirees

25 February 2019: According to a new survey commissioned by leading Pensions provider, Aviva, planning for retirement is way down the priority list for women in Ireland, with only (6%) of women surveyed perceiving it as being a high priority. The Behaviour & Attitudes Survey* of over 1,000 adults nationwide reveals that over 6 in 10 (63%) of women surveyed said they do not have a private pension with over half (55%) of these women admitting they had never considered putting one in place. Almost half (47%) of men cited having a pension, compared with only (37%) of women, which represents a pension pay gap of (10%) and could point to a future of financial disempowerment amongst future female retirees.

When asked about the prospect of auto-enrolment, over 2 in 5 (43%) men were aware of the Government’s plans, when compared to 1 in 3 (33%) of women. A larger cohort of men (64%) were also found to be in favour of auto-enrolment in comparison with (58%) of women surveyed. When asked about security of their future retirement income, almost 2 in 3 (59%) men indicated a higher level of confidence when compared to only 2 in 5 (40%) women, suggesting greater levels of concern amongst females when it comes to pension provisions.

Ann O’Keeffe, Head of Individual Life and Pensions, Aviva, said of the findings: “Having conducted this same survey for the last 4 years we have found that, worryingly, pension coverage for women has remained largely stagnant at (37%) since 2014. While the participation rates for both genders are far too low – the case for women is particularly concerning. Saving for retirement doesn’t appear to be high on people’s agenda.”

While insights demonstrate a disparity across genders when it comes to retirement provision, unsurprisingly, age too plays a significant role. The research shows young workers aged 25-34 as being the age group least likely to have a pension (30%) when compared with (54%) of 35-44-year olds and (43%) of 45-55-year olds, which suggests a pension is not a focus for most people in their 20s and 30s, limiting their potential contribution period.

On this, Ms. O’Keeffe commented:
Of those under 35 without a pension, almost 2 in 3 (58%) say they simply have never thought about it. The survey paints a clear picture of a highly optimistic generation in their financial well-being when they can no longer earn an income While it is understandable that retirement provisions might be the last thing on people’s minds, particularly for younger people, in actual fact it’s one of the most important financial decisions a person can make during their working life.”

“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 – across all age groups understand the benefits of financial planning as early as possible in their careers.”

Aviva customers and consumers alike are invited to visit www.mindthepensiongap.ie to avail of its free online pension calculator and for more information on a range of bespoke retirement savings plans.

 

Reference: www.aviva.ie

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Why Life Insurance?

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What is Life Insurance?

It’s not the most cheerful of subjects – but it can bring peace of mind

It’s not the most cheerful of subjects – but it can bring peace of mind

It may not be the most cheerful of subjects, but the peace of mind of having financial security for the family is a real reason to give some thought to life assurance sooner rather than later!

What is Life Insurance? 

Like home or car insurance, a life insurance policy pays out when something goes wrong, essentially in this case, the death of the insured person/s.

Does Life Insurance last for life?

It can, but most people have term assurance, which is a life insurance plan that covers you for a specified amount over a specified term.  In the event of death within the fixed time period, a cash lump sum is paid out to the insured person’s estate or a nominated benefactor/s.

There is no pay-out at the end of the policy term, if the insured has not died – just as with any other form of insurance, such as car or home insurance, where a claim is not made during the policy term.

How long is the insurance term?

Life insurance can be purchased to cover different terms; factors such as the age of children or length of time to retirement would be taken into account.

Generally a minimum term is calculated to the age a youngest child will reach independence, if the policy is for family protection.  Those with no children, looking to financially secure a remaining spouse, would normally buy a policy up to age 65, with an option to convert to longer-term cover after that.

I have Mortgage Protection; is this not life cover?

Mortgage protection is the most basic form of life assurance and the cheapest.  It generally decreases each year in line with the mortgage balance outstanding.

Remember, however, that this cover is intended to pay-off the mortgage amount owing to the financial institution.  While this may secure a home, it does not provide a cash income to the family.

Is it possible to have life insurance for life?

Yes, whole-of-life cover is a guaranteed life assurance policy which pays out a lump sum in the event of death.  There is no fixed term attached to this type of policy; it is cover for the person’s entire life and is therefore usually more expensive than other forms of life assurance.

How much does life insurance cost?

How much you pay varies, depending on the insurance provider, but the main factors that dictate the price include the sum assured for, the length of term of the policy, the type of insurance policy, your age, your health, especially any existing medical conditions, and whether or not you smoke.  Policies can cost anything from €15 a month depending on these various factors. As an example a non-smoking couple in their mid-30’s can take out €250,000 over 10 years for circa €30 per month.

How much will a policy pay out?

Each individual determines how much their life is insured for, the amount usually recommend within the life assurance industry being in the region of ten to fifteen times net salary.  This figure, therefore, is a key factor in determining the cost of the policy.

What if I get ill and cannot provide for my family?

Specified Illness cover can be taken out as a standalone plan, or as part of a life insurance policy.  It pays out a lump sum if you are diagnosed with a condition specifically listed in your policy.  This type of policy tends to be more expensive than life assurance, as you are five times more likely to claim throughout the policy term than you are to claim on a death policy.

Can couples get life cover together?

Joint life policies and dual life policies are sold, but note the difference in benefits received by claimants on the two types.  A joint life policy offers only one pay-out in the event of a death to the surviving claimant.  However, a dual life policy will provide separate pay-outs to the estate on the death of each claimant.

Reference: www.independent.ie