Report finds lack of financial understanding amongst Irish employees

Finance | Wed 13 Jan | Author – Business & Finance
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Irish adults are struggling to understand many aspects of their personal finances and pension plans, as revealed in research carried out by Irish Life.

The research was conducted by Coyne Research on behalf of Irish Life in 2015. The total sample of 1,001 adults surveyed is representative of the national population in Ireland.

The survey highlighted that 64% of people don’t know what percentage of tax relief they receive on their pension payments, and over half do not know how pension tax relief works.

The research revealed that Irish consumers have difficulty in understanding various financial terms and how their investments work.

Only just over one-third of Irish adults (35%) understand what an Approved Retirement Fund (ARF) is, with understanding of the term ‘Annuity’ also relatively low at 47%.

However, more general financial terms such as ‘shares’ and ‘bonds’ achieved good understanding levels at 79% and 60% respectively.

Irish consumers also appear to have low levels of understanding and awareness when it comes to pensions. The research confirmed that just over a fifth (21%) of those with a pension don’t know what their company pays into their pension, or even know the exact figure they themselves pay into their own pension fund.

Worryingly, only 29% of adults know how much they need to live on in retirement, highlighting a serious lack of financial planning by Irish people for their futures.

The research also found that Irish people believe they should start planning for retirement at age 36, and they expect to retire from working at 64 years, two years before the state retirement age of 66.

David Harney, managing director, Irish Life Corporate Business, said: “While it’s good to see that 57% of consumers are more aware of their personal finances than they used to be, 32% still claim they don’t really understand pensions and as high as 71% don’t know how much money they will need to live on as pensioners.”