Irish Pensions: With the weekly state pension at just €223.30 per week consumers in Ireland are more worried than ever about having enough money to buy staple goods like food and clothes in retirement. New research from Hibernian shows that almost 1 in 2 Irish people are worried that they will not have enough money to fund an ‘adequate’ standard of living when they retire.

Hibernian’s survey of almost 1,000 consumers in Ireland also shows that 54% of current retirees in Ireland wish they had done something earlier to provide for their retirement and regret not having started a pension earlier. Highlighting the lack of financial preparedness, 61% of respondents to the Hibernian survey have also admitted that they would like more advice on how to manage their personal finances.

And while retirement is always seen as being a long time away, by 2036 one in five people in the population will be at retirement age. That is anyone who is just 37 today. An analysis by Hibernian Life & Pensions also shows that delaying taking out a pension by just a few years can reduce the size of a retirement fund by as much as half and will also see generous annual tax benefits disappear. This is particularly important for the self-employed who face the October 31st deadline to pay and file with the Revenue.

One of the side effects of not having enough to fund their retirement is a longer working life. And the Hibernian research shows 55% of people are prepared to do just that to fund their retirement. However by taking the right financial advice, these issues can be overcome leading to a more balanced and relaxing lifestyle after the normal retirement age of 65.

Speaking about the Hibernian research findings, Mark Reilly of Hibernian Life & Pensions said: “Obviously the financial market turmoil is a cause of serious concern for a lot of people and the feedback we have been getting in Hibernian is that consumers are clearly nervous about investing at the moment because of this turmoil. However by not investing in a pension early enough retirees may be forced to live a very frugal lifestyle. Many will have just the state pension of €223.30 per week to live on or the equivalent of about €12,000 per year and will find it challenging to purchase just the basic requirements like food, clothes, light and heat.”

Hibernian’s Mark Reilly added: “When you’re young a few extra euro invested for the long-term makes a significant difference. For example, at age 25 a contribution of €300 a month can grow to almost €680, 000* when you retire. But if you decide to wait another 10 years and start investing in your pension at age 35, the size of your retirement income based on the same monthly contribution decreases by half to just over €330, 000*. So the sooner you start saving for retirement the better, and for the self-employed, remember the October 31st deadline from the Revenue to maximise the tax benefits of investing in a pension.”

To help consumers avail of the generous tax benefits from taking out a pension but still protect themselves from the current financial market turmoil, Hibernian has launched the Hibernian Safe Haven Fund. The Hibernian Safe Haven Fund was specifically designed to offer customers a distinct stepping-stone to investing in equity markets while also maximising the tax benefits of taking out a pension. The first step enables customers to start a pension and place their funds on secure deposit with a guaranteed return of ECB + 1% until September 2009. Customers can then take additional small steps toward investing in a range of Hibernian equity market funds as their confidence in investment markets returns to normal levels.

The biggest dividing line in Irish society is that after 15 year of the Celtic Tiger, one group in society - politicians and the rest of the public sector - have what could be termed gold plated pensions that provide retirees with the same increases as current occupiers of their last grade, while more than 1 million private sector workers do not even have a basic occupational pension scheme. The politicians with their own position protected and with collective trade union power now only predominant in the public sector, there was no pressure to bring in a mandatory system, that could have been eased in over several years. Meanwhile, €20 billion has been accumulated in the National Pensions Reserve fund for future public pensions. Lord Adair Turner, who chaired the UK's Commission on Pensions, said in Dublin in 2006, that it had recommended a system which would automatically enrol employees in a pension from the time they began working unless they themselves choose to opt out of the scheme.  This was necessary, he argued, because "a purely voluntary system was not going to work. Employers won't provide adequate pensions for employees and individuals won't go out and buy pensions themselves." - - Michael Hennigan Finfacts

Mark Reilly of Hibernian said: “Self-employed people typically have a higher tolerance for risk as evidenced by their decision to leave behind paid employment and start their own firms. Central Statistics Office (CSO) figures also show that just 46% of the ‘self employed’ have a pension. This compares unfavourably with the national average of 54%. With Hibernian’s Safe Haven Fund we are living up to our promise of helping the self-employed achieve peace of mind and prosperity and in the process we are also helping them reduce their tax bill. ”