Government pension proposals get resounding endorsement of public
-28% of those who would prefer to own their own home say they will never be able to afford one, according to Aviva Family Finance - 2018
In a separate question on pensions, the Report found that fewer1 in 4 (23%) of workers who have a private pension have acted to increase their contributions over the last five years. Ann O’Keeffe, Head of Personal Pensions and Investments, says this finding is in line with Aviva’s own experience. “We know that about a quarter of our private pension policyholders are making efforts to increase their savings now that the economy is growing again. But the big problem in pensions in Ireland is the fact that 65% of private sector workers have no retirement savings plan at all.”
Under the proposed Auto-Enrolment Pensions Savings Scheme, as outlined by the government, private sector workers would be automatically enrolled in an occupational pensions’ scheme to which employers and government would also contribute. The suggested rate is a 6% contribution by workers, a matching contribution from employers and a further 2% government contribution. The government has committed that enrolment to the scheme will begin in 2022.
Commenting on the survey findings on the scheme, Ann O’Keeffe said: “We are pleasantly surprised that the support is so high across all age groups, and highest among those who are already retired and who know the value of having an adequate savings plan. We are also impressed by the numbers who say they would remain enrolled. Although the proposed reforms are only in an early stage of development, we believe these findings should embolden the Government to be ambitious in the level of contributions it sets in the final plan.”
Before the introduction of auto-enrolment in the UK in 2012, surveys showed that 28% said they would opt out. The latest research shows that just 9% have done so and the number of occupational pension savers has grown by 9 million since 2012.
“There is still a long way to go with the reforms. Substantial issues remain to be sorted out, including the capacity of SMEs to contribute, the element of tax relief, and how the scheme interacts with existing incentives. However, the response to our survey is encouraging and we can learn from the experience of our nearest neighbour so that it provides private sector workers in Ireland with an adequate income in their retirement,” adds Ms O’Keeffe.
Elsewhere in the national survey, Aviva’s Family Finances Report found that 41% of those who rent say they are struggling financially, up 7 points in the last 12 months. Only 15% of renters say they are comfortable financially. Most renters (64%) are aged 25 – 44. In an indication of a gender gap in personal finances that emerges throughout the survey, women are more likely to live in rented accommodation than men: 55% to 45%.
Overall, our Report found increased optimism about the outlook for the economy and for households. But there were two noteworthy trends. While those who say they are living comfortably remain substantially better off financially, strugglers have become less pessimistic in outlook. Their belief in economic recovery has risen by 12 points and their confidence about their employment prospects has grown by 5 points. Over a third of this group say they are in control of their finances.
On the other hand, those who are comfortable have become more negative on most measures including job security and pay with the numbers expecting a salary increase down 8 points year on year.
“Our latest research shows a number of trends that could have a lasting socio-economic impact, particularly in relation to renters and home ownership. For half of those who have yet to buy, home ownership has become a dearly held but distant aspiration rather than a plan. This could be the beginnings of a long-term change in the pattern of home ownership in Ireland,” concludes Ann O’Keeffe.
For more information, Aviva Family Finance - 2018.