Pensions, what exactly are they? As a young worker, it is easy to opt out of these regular reductions in pay to create a fund that will not be utilized for the next few decades of your life. Pensions are funds in which payments are drawn from your salary each month or every few months in order to support yourself and the lifestyle you want to maintain after retirement.
According to recent official data from the Irish Congress of Trade Unions, only 47pc of workers are contributing some of their salary to an occupational or private pension. This means that 53pc of the working population will be reliant on the non-contributory state pension plan. This plan offers a varied amount of funds to adults, mostly those who are retired.
The age for retirement is 66 years, but there are adults that are to qualify for this plan below that age; if you are below 66 but do qualify, you will receive €156.60 per week from the government. Between the ages of 66 and 80, you receive €237 per week. Over 80 years of age receives €247 a week in government funded retirement compensation.
These figures all seem relatively high, until you factor in the cost of housing. At the highest government retirement compensation, a person is only earning a total of €12,844 a year; this will not sustain a high standard of living without supplements from your savings. The government is well aware that this is not enough to live on alone, but simply cannot afford to increase the weekly payments. To fix this deficit in old age funds available, the Irish government is thinking of creating a mandatory pension program but it is not likely to go into effect until 2020, if at all.
This shift in income creates a significant drop in the overall quality of living in the elder population. Those who start pensions young and continue to save throughout their work experience are usually able to live at, if not above, their current situation standards.
Overall, the irish government is concerned that there will be an influx in elders that are retired and who are just living on state allowance. In the next 40 years, the ratio of those who are works versus pensioners is said to be 2:1. This change is bound to take up much more of the national funding, which could increase the deficit by billions.