Irish adults are struggling to understand many aspects of their personal finances and pension plans, as revealed in new research* carried out by Irish Life. The survey highlighted that 64% of people don’t know what percentage of tax relief they receive on their pension contributions, and over half do not know how pension tax relief works. Launched today, Irish Life EMPOWER is an improved company pension plan which aims to make pension information more accessible for employees so they can make better decisions for their futures.
The research revealed that Irish consumers have difficulty in understanding various financial terms and how their investments work. Only just over a third of Irish adults (35%) understand what an Approved Retirement Fund (ARF) is, with understanding of the term ‘Annuity’ also relatively low at 47%.
However, more general financial terms such as ‘Shares’ and ‘Bonds’ achieved good understanding levels at 79% and 60% respectively. Surprisingly, four in 10 people claim they don’t know the percentage of the higher and lower rates of income tax in Ireland.
Irish consumers also appear to have low levels of understanding and awareness when it comes to pensions. The research confirmed that just over a fifth (21%) of those with a pension don’t know what their company pays into their pension, or even know the exact figure they themselves pay into their own pension fund. Worryingly, only 29% of adults know how much they need to live on in retirement, highlighting a serious lack of financial planning by Irish people for their future.
The research also found that Irish people believe they should start planning for retirement at age 36, and they expect to retire from working at 64 years, two years before the state retirement age of 66.
Commenting on the findings, David Harney, Managing Director, Irish Life Corporate Business, said; “While it’s good to see that 57% of consumers are more aware of their personal finances than they used to be, 32% still claim they don’t really understand pensions and as high as 71% don’t know how much money they will need to live on as pensioners.
“There is also a worrying lack of understanding around general financial knowledge. For instance, three in five people surveyed consider cash to be a more volatile investment than equities, which is clearly not the case. To help companies and their employees understand more about their pensions, we have introduced the Irish Life Empower company pension plan, giving customers more control over their financial planning at all life stages.”
Irish Life EMPOWER offers company pension expertise and a range of personalised investment options for companies. It provides information for employees that’s easy to understand, and easy to act on to help them appreciate what they will need to live on in retirement. Irish Life EMPOWER focuses on helping people set their retirement targets and understand how they can make a positive impact on the fund they will have available when they retire.
For more information on Irish Life EMPOWER, visit www.irishlifeEMPOWER.ie
* The research was conducted by Coyne Research on behalf of Irish Life in 2015. The total sample of 1,001 adults surveyed is representative of the national population in Ireland.