In September 2016 Aviva published a report called – Mind the Gap – Quantifying the Pension Savings Gap in Ireland.
Our problem is a change in demographics with an ageing population with a longer life expectancy coupled with a pension coverage in the population in 2016 of only 46.7% and lower investment returns than previous decades.
Other countries have similar problems but have begun to address them with schemes like auto-enrolment for workers in pension schemes. The Pensions Authority in Ireland is in consultation with the Minister for Social Protection’s office concerning the introduction of a universal workplace retirement savings system.
Ireland needs to save an extra €27.8bn a year to close its pension savings gap. As a percentage of GDP the pension savings gap in Ireland is 13%, the same as in the UK.
Ireland’s current generation of retirees – those retiring between 2017 and 2057 – need collectively to save an additional €27.8bn per annum to provide an adequate income in retirement.
The full report is attached below. If you would like to identify your own pension funding needs, we in Efficient Financial would be happy to help you with that and work with you on a plan to address any shortfall in funding you may have. All assets, not just pension investments, need to be included in any review.
Also below, you will find a link to a 23 minute documentary produced in 2013. It highlights how pensions have changed over the years and how a global problem of changing demographics and underfunding with current lower investment market returns than the 80’s and 90’s, have led to major challenges for pension schemes, both private and public.
It also shows how some countries have addressed these new challenges and begun to ensure the sustainability of these schemes for future generations. Worth a look!