Understanding Old Age Pension in Ireland
According to the statistics 50% of Irish people will have to try and survive on the Old Age Pension, now called the State Pension.
Let us assume you are aged in your 30’s or 40’s. Imagine you are now aged 65 and your employer has just thanked you for your years of service and congratulated you on reaching your employer’s mandatory retirement age of 65. Discount your mortgage payments as you will likely own your home outright at this stage. You now have 3 years without income before you receive the Old Age Pension at age 68. At age 68, if you have enough contributions made over your lifetime, you will qualify for the State Pension which is currently €230 per week, or €11,960 per annum. In addition to increasing the age to 68 the government recently reduced the pension benefits to those who do not qualify in full for the State Pension by narrowing the qualification bands. In addition, it is likely that the pension age will be increased further as life expectancy continues to rise.
Compare the Old Age Pension to your current earnings. What will you have to give up in order to survive? This is a question which 50% of the working population who have no pension provision will have to face in the future, unless they act now to ensure that they are not totally reliant on the State Pension.
As low as the pension is now, it will only get worse in the future as increased life expectancy leads to a greater number of people of pensionable age with a smaller percentage of the population still at work and paying for the State Pension. It is highly unlikely that the State Pension will keep pace with inflation and some commentators believe that it may be removed entirely at some stage in the future.
There is no easy answer to this problem. People have to start saving at a younger age or be prepared to work long past the age of 68, which may not be possible due to health issues or difficulty in securing employment in later life.
At Pearce Financial Planning we help people to address this issue and help them to live their life without the fear of running out of money.
Learn more about old age pension in Ireland, get in touch today,
Old Age Pension in Ireland
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