The amount a person needs to retire depends on various factors, such as their lifestyle, health, and overall retirement goals.
A recent report (opens a new window) by the Irish Association of Pension Funds (IAPF), found that a person in Ireland will need approximately 50-65% of their pre-retirement income to maintain their lifestyle in retirement. This means if a person earns €50,000 per year, they will need around €25,000 to €32,500 per year in retirement to maintain a comfortable standard of living.
According to the 2020 Pension confidence survey (opens a new window) carried out by the IAPF, only 45% of employees in Ireland are confident that they are saving enough for their retirement.
Another survey carried out by the Central Statistics Office (CSO) found that in 2022, 34% of people in employment had no supplementary pension cover (opens a new window). 40% of people cited affordability as the issue, while 47% said they either never got around to organising it, or would organise it at a future date.
How financial education can help
It’s important for individuals to think carefully about whether they are saving enough for retirement. By supporting employees with financial education, employers can make a difference.
Concerns around financial wellbeing are among the top causes of stress for employees. A clear strategy on financial wellbeing, by developing financial literacy, helps employees understand their finances and make informed decisions about their money, reducing the risk of financial stress.
This, in turn, enables better planning and decision-making, giving employees the tools to plan for the future and set financial goals.
In the case of pensions, this allows them to secure a more comfortable income on retirement and gives them greater freedom, while reducing the risk of poverty in old age.
Nor are employees the only ones who stand to gain from financial education. From an employer’s perspective, the business case for providing financial education is strong.
By reducing stress and improving financial literacy, employees are more likely to experience improved wellbeing – improving employee health, reducing absenteeism, and increasing employee engagement at work.
Here are 8 top tips for employers:
Get employees engaged from the start – Reviewing your induction process to ensure that the pension scheme is covered in depth at the earliest possible opportunity. Try to include details in an information pack for employees to take away and point out where they can go for further information.
Provide clear and concise information – One of the main reasons employees do not engage with their pension is because they do not understand it. Employers can solve this issue by providing clear and concise information about the pension scheme. Ensure that all information materials are jargon free and include visual aids where possible.
Offer incentives – Employers can offer a matching contribution scheme where they match the employee’s contribution to the pension, up to a certain percentage. This can motivate employees to save more for retirement.
Encourage the use of technology – Employees are more likely to engage with their pension if you make it easy for them. All pension providers will have an online portal and/or apps which will make employees’ pension information more readily available.
Encourage employees to contribute as much as they can – Pension providers’ websites often include online tools to show the potential effect of increasing or decreasing paymentson your pension pot. Adding a comparatively small amount to their contributions could make the difference between a good lifestyle in retirement and merely ‘getting by’.
Communicate regularly – Keep employees informed about the pension plan by providing regular updates and reminders. Doing this through different media channels can often help to keep members engaged.
Provide financial education – Offer educational resources and workshops to help employees make informed decisions about their pensions and broader financial planning. Independent advice, delivered in an engaging manner, is key.
Make pension part of your overall benefits package – Pensions aren’t the most exciting, so by making it part of an overall engaging benefits package that is linked to a broader employee value proposition, will drive engagement, financial security, and employee loyalty.
