Around half of consumers say they will rely on the state pension as their main source of income in retirement, according to a survey of consumers carried out by KBC Bank Ireland.
As part of its most recent consumer sentiment survey - a monthly questionnaire of a nationally representative sample of 1,000 adults - the bank included a supplementary list of questions on consumers' understanding, aims and actions in relation to their personal pension circumstances.
Just over half of respondents said they expected their spending power would drop in retirement with a fall of less than 25% the most common expectation.
The state pension is currently paid at a maximum rate of €248.30 a week to people from the age of 66 who have sufficient PRSI contributions.
According to the CSO, average weekly earnings before tax stood at just over €800 in the second quarter of 2020.
If relying entirely on the state pension, that would represent a fall of around 70% on pre-retirement income, although the application of a lower rate of taxation on the pension earnings would help to reduce the gap in actual income.
Most people would also expect to have fewer expensive outgoings, like mortgages or education costs, after retiring.
Just one fifth of survey respondents said they would rely primarily on a personal pension with 15% saying they did not know what source of income they would rely on or hadn't considered the issue.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
For those who do not have a pension, one in three said they could not afford one.
A roughly similar proportion said they had not considered getting a pension or do not know enough about pensions.
There is no obligation on employers in Ireland to provide a pension scheme for employees. There is however an obligation to give each employee access to a Personal Retirement Savings Account (PRSA).
Buying a home and repaying a mortgage were cited as more important saving priorities than a pension for most age groups.
Saving for a pension only becomes a main priority for those aged 55 or older.
"The survey results highlight a tendency to regard pensions as something that can wait while more immediate concerns around housing, education or holidays are dealt with. The reality is that early engagement in planning for retirement can make a huge difference," John Gethin, Branch Manager, KBC Life and Pensions said.
"Irish consumers appear to have a well-defined view of a distinctly different life stage in retirement. However, the survey suggests the financial planning needed to fund that retirement is far less developed," Austin Hughes, chief economist with KBC, who carried out the analysis of the survey findings, said.
"It's as though the future is another country that people don't expect to visit for some time and they don't see the need to have the 'passport' of a pension until just before they travel," the economist added.
Meanwhile, KBC Bank Ireland today launched its non-standard personal retirement savings account, KBC Lifestyle Extra PRSA, which offers a wide range of personalised investments based on people's individual appetite for risk, reward and loss.
The new product is the second to launch as part of KBC's integrated bank and insurance model.
The bank said its new pension product offers investors more choice and greater control as customers can choose from eight funds, each offering a suitable balance of equity, bonds, cash and other assets.