Bank of Ireland Survey Reveals a Majority of People Want to Plan Their Financial Futures
Pensions Can Be a Major Financial Asset – But Lack of Knowledge Is Preventing People from Taking the Next Step
- 59% of men claim to understand pensions in contrast to 47% of women
- Only 53% of survey respondents understand how pensions works
- 35% of people are thinking more about retirement than pre-pandemic
A recent Bank of Ireland survey has revealed that 59% of people are thinking more about their financial future than before the onset of the pandemic, with over a third of respondents (35%) planning more for their retirement ever since Covid-19 hit. The survey shows that people are keen to invest in smarter ways to ensure they can enjoy a comfortable retirement, but only 53% of those surveyed understand how pensions work – with men (59%) declaring a better knowledge of this area than women (47%).
The research reveals that while Irish people are saving, they are seeing little reward in the current ultra-low interest rate environment. Pension holders, on the other hand, who choose well diversified funds have seen bumper returns over the last year, providing them with a real chance of achieving better outcomes in the longer term.
Commenting on the survey, Bernard Walsh, Head of Pensions & Investments at Bank of Ireland said “Many people still view the pension’s area as a complex one, and something that’s hard to access. They are put off by this perceived complexity, and then delay taking the necessary next steps. But our clear advice to customers remains the same, which is to start with the basics and to build up your knowledge and understanding which will help inform the planning for your financial future.”
The pensions’ survey uncovered that affordability (54%) is the main blocker when it comes to taking out a pension, with family life taking up the bulk of people’s incomes and parents less likely to take out a pension until they are much older and their focus shifts back to themselves. The survey shows that 1 in 3 people in the 23 – 30 age cohort admit to not understanding how pensions work and therefore doing nothing about it. However from a financial planning point of view relevant research shows that the sooner you can start a pension the better, as it allows time for a pension pot to grow steadily until national retirement age.
In tandem with the pension’s research, Bank of Ireland’s recent Financial Wellbeing survey revealed that women are less likely to have a private pension, and the gap increases significantly for older age groups. Only 32% of women aged over 55 have a private pension, compared with 58% of men. That compares to 29% of women aged 18-34 and 32% of men. The research also found that women are also less likely to understand the tax breaks associated with pensions than men are (37% vs 51%).
Of those who do have a pension in place, less than half (41%) are confident that their current pension plan will provide them with enough money to fund a comfortable retirement. In this area once again men were more confident about their pension provisions than women, with 47% of male respondents expressing satisfaction compared to just 33% of women.
Bernard Walsh, Head of Pensions & Investments, for Bank of Ireland said: “Getting expert advice to explain the benefits of saving for retirement is critical in making people more comfortable with this topic. This newly commissioned survey tells us that 45% of people are saving more than they did in the past, but are they saving in the right way? They should be looking to take advantage of a very generous tax system that really helps them to build up a decent pension pot – but only 44% of those surveyed understood how to benefit from these tax reliefs.”
“The other major issue that needs to be addressed is the imbalance in pension knowledge between men and women, with 59% of men professing to an understanding of pensions which lies in stark contrast to 47% of women. Our recent Financial Wellbeing survey showed that women are less confident than men when it comes to managing money, a clear imbalance that we need to rectify. Our advice is to start a pension as soon as you can, as there is never a bad time to start saving for the future, and with Bank of Ireland’s expert advice we can guide you along the way.”
For more information on the Pension Pot webinar series and to register for the next webinar – https://personalbanking.bankofireland.com/plan/pensions/pension-pot/