17th June 2019 GDPR & Privacy Section

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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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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

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5 a side Soccer Tournament in aid of St Michael’s House 23.03.2018

IPF hosted a 5-a-side Football Tournament in aid of St Michaels House last Friday 23rd March.

We would like to thank all the representatives from each of the Life Companies who their time to be involved and for all the donations made.

St Michaels House residents accept a cheque for €2,500

Tournament Winners Zurich Life

Player of the Tournament Ian Slattery

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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

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Budget 2018 – How will it affect you?

Below is a brief summary of the main points announced in today’s Budget -:

  • Standard rate income tax band increased by €750 for 2018, giving a tax saving in 2018 of €150 for higher rate taxpayers.
  • Earned income tax credit for the self-employed and proprietary directors increased by €200 to €1,150 for 2018.
  •  The lower USC bands and tax rates will be reduced in 2018. The maximum saving for higher earners is €178 pa.
  • DIRT rate reduced to 37% in 2018 but no change announced in the exit tax rate of 41%.
  • All State Pensions to increase by €5 pw from the end of March 2018. This will make the maximum State Pension €12,695 pa, or just €5 pa under the €12,700 pa specified income limit for the ARF option.
  • Stamp Duty on the purchase of commercial (i.e. non-residential) property is increased from 2% to 6% with effect from midnight 10th October 2017.
  • Mortgage interest tax relief for those who bought their homes between 2004 and 2012 is being phased out between 2018 and 2020. The relief will finish for these borrowers at the end of 2020.
  • No change in CAT thresholds.
  • New tax efficient share option scheme (called KEEP) will be introduced in 2018 for employees of unquoted SMEs.
  • No changes announced in private pension tax reliefs or taxation of benefits.

Use the calculator below to see exactly what impact today’s Budget is likely to have on your pocket-: http://www.thejournal.ie/budget-2018/

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Why an early savings habit will set you up for the future

Pensions are like a marathon says Zurich’s Rose Leonard, if you want to do one you are going to have to start training now. The first mile is the hardest but once you have developed the habit, it gets easier.

The debate around the pension time bomb and the challenges facing the economy when it comes to pensions continues unabated. The biggest challenge is the changing demographics with people living longer. Life expectancy is increasing with men’s life expectancy up from 78 years of age in 2011 to 85 years in 2046. For women that number has jumped too, and females can now expect to live until at least 89 years as opposed to 82 in 2011*. Obviously this is great news, but are we considering the impact on the cost of supporting the retired population, and will the State pension sustain those in retirement for a longer period of time?

With increased life expectancy combined with forecasted birth rates expected to produce a doubling of the proportion of retired people to workers by 2050, a renewed focus on encouraging long-term savings is what is urgently required.

“Today there are about five people working for every one person retired. In less than 40 years’ time we will probably have about two people working for every one person retired,” Rose Leonard, head of distribution and customer relationship management at Zurich says.

 

Rose Leonard, head of distribution and customer relationship management at Zurich

 

Rose Leonard, head of distribution and customer relationship management at Zurich

This changing demographic will place a considerable financial burden on the State and tax payer. “Because people are living a lot longer they are going to need a lot more financial support in retirement, but they haven’t started to save earlier and we have to address that problem now,” she warns.
One of the main ways this problem can be addressed according to Leonard is for people to accept responsibility themselves and start saving earlier. “My advice to employees would be to join their pension scheme as early as possible. If an employer doesn’t provide a pension scheme, it would be worth considering starting a personal pension. People need to develop a habit of long-term savings really from their mid-20s.”

Communication & engagement

Leonard agrees that engaging people in the conversation around pensions can be another challenge. “It is true that a lot of people haven’t engaged in the conversation at all”, she says “and part of that might be because it’s a bit complicated.” According to Leonard, those that haven’t engaged tend to be younger, and people starting to show an interest in pensions when they reach the age of 50 is too late. “If you retire at 65 you could live for another 30 years so you need to be able to provide a replacement income for those 30 years in retirement. Starting to save long-term in your 20s is the best approach.”

For the millennial generation – who live very much in the here and now – why should they be planning now for their retirement many decades from now? “People in their 20s need to put time aside to understand the cost of pensions long-term and they need to develop a habit of long-term saving. It’s like running a marathon – you might say you would like to run a marathon in 2018, and if you do, you need to start training now,” Leonard explains.

Admittedly, most people don’t want to think about getting old and for the majority of people retirement is far from their minds. But the reality is that most people do grow old and live well into their old age and have a good long retirement. So encouraging people to think about how they can enjoy their life in retirement is key.

Leonard agrees that central to engagement is how pension providers break down the barrier and demystify the process. “In Zurich, we pride ourselves on communication. Our mantra when it comes to pension schemes is ‘communicate, communicate, communicate’. It’s important for companies like Zurich to keep our message clear and simple and I feel that’s something that we are very strong at.”

A universal system

There has been much discussion in Ireland around the introduction of auto enrolment, whereby a universal, workplace retirement saving system for workers without supplementary retirement provision, would be in place. Essentially, an automatic pension scheme would make it compulsory for employers to automatically enrol their eligible workers into a pension scheme.

“When we talk about auto enrolment the question is should we have a universal retirement scheme in Ireland whereby employers would automatically enrol their employees into this scheme,” Leonard asks? “The consensus among the government, the industry, and other bodies is that there should be a universal retirement scheme whereby members would be automatically enrolled.”

Leonard argues that those people in their 20s and 30s that don’t want to think about retirement would benefit from automatic enrolment, and it would encourage them to develop a habit of saving for the future. “We spoke earlier about whether or not the State pension will be sustainable, and when you consider that there are 17,000 new pensioners year-on-year, then it probably isn’t sustainable; something has to be done – we all have to accept responsibility for saving in the long-term.” A final piece of advice from Leonard for those thinking of starting a pension: “Start today,” she declares.

 

In order to help provide for your retirement, starting a pension is one of the smartest financial decisions you can make. When choosing a pension, having all the information you need is key. Sound advice is invaluable, so it’s a good idea to seek advice from a financial advisor. Talk to your company’s scheme advisor or an independent financial advisor who will guide you through the process and help you select the right pension plan for your circumstances. You can find a local financial advisor near you with the Zurich Advisor Finder. Alternatively, Zurich’s Financial Planning Team can provide you with more information about Zurich’s pension plans and options. For more information visit www.zurichlife.ie.

Reference: The Irish Times

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Retirement Seminars 2017

IPF organised four seminar around the country in 2016.  All events were fully booked with 515 attendees in total to these seminars.

Due to this demand, we have two upcoming seminars this Spring.

The first on March 3rd in the Kingsley Hotel in Cork, followed by 22nd March in the Westbury Hotel Dublin.

These events prove to massively popular and are always oversubscribed.

Those interested in attending should book their places as soon as possible through sarah.connolly@ipf.ie.

 

Here is the usual agenda for the seminar:

1) Safety in the Home An Garda Siochana
2) How to take care of your health after 60 Doctor
3) Financial Planning for Retirement Financial Advisor
4) Making your money work for you in retirement Investment Specialist
5) A Positive Approach to Retirement Retirement & Life Planning Specialist
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Donation to Don Bosco House 13/12/2016

 

   

 

Sarah Connolly from IPF presents a charitable donation to Kevin McCarron and his team in Don Bosco House this week.

Don Boscos provide amazing support to young people in Dublin and we are delighted to support them this year.

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