The half-a-million Northern Ireland folk sitting on pensions time bomb
Northern Ireland is facing a pensions time bomb with up to 500,000 people here having no tangible plan to guarantee an income after retirement.
It has also emerged that over half our citizens have no idea as to how much they will need to live on when they retire.
Indeed, a warning survey has confirmed that Northern Ireland is the worst region in the UK when it comes to awareness of a personal pension's performance, and whether it is on track to meet retirement goals.
Apathy and confusion are recurring themes of Aegon UK's Retirement Readiness Report, which warns of severe financial hardship for thousands of our would-be pensioners in years to come.
And the figures help illuminate a worrying trend in Northern Ireland which, due to modern-day longer life expectancy, has a growing number of older people who rely solely on the State pension (£110.15 a week) and are having to accept significantly lower living standards when they retire.
Even when sweeping Government reforms of retirement funding, unveiled in the Queen's Speech earlier this year, come into effect in 2016 (when the State pension is expected to be worth £155 a week), they are unlikely to maintain the living standards the recipients enjoyed when in full-time employment.
The Belfast Telegraph also understands that only a quarter of retirees have defined benefit pensions which have an adjustment built in to keep track of inflation – and only a minority of private sector employees are in such schemes.
Duncan Jarrett of Aegon UK, one of the world's largest life insurance and pensions firms, said the lack of understanding in Northern Ireland over pension planning was worrying.
"Industry analysts have said there is a pensions time bomb ticking, but our study suggests that time has almost run out," said Mr Jarrett.
"Savers in Northern Ireland don't appear to have much idea how much their pension is worth, what income it will give them in retirement or whether it is on track to meet their retirement needs."
There are around 280,000 people in Northern Ireland who are aged 65 and over for men and 60 or over (women), and the number reaching formal retirement age each year is just over 16,000.
Those numbers are expected to rise in coming years due to increased longevity, and could well top 300,000 by 2020.
Northern Ireland's working population is some 800,000 people – over half of whom have no tangible plan to guarantee an income after retirement.
The ticking time bomb effect has been fuelled by growing unemployment and the rising cost of living, which in turn has resulted in fewer people putting money aside for the future.
Even those who do save have suffered from plummeting interest rates. It is estimated that around 60% of our OAPs are currently dependent on the State pension alone.
Retirement and how to plan ahead for it
Q How much is the State pension?
A The pension currently stands at £110.15.
Q Who is entitled to a pension from work?
A Every employer must enrol workers on a workplace pension scheme if they:
– are aged 22 to pension age
– earn over £9,440 a year
– work in the UK.
Q How does a workplace pension work?
A A percentage of your pay is put into the pension automatically every payday. Your employer and the Government may also add money. You can usually take some of your pension as a tax-free lump sum when you retire. If the amount you've saved is small, you may be able to take it all. Twenty-five per cent is tax free.
Q How many Northern Ireland pensioners are dependent on a State pension?
A Around 60% of those aged over 65.
Q How many men here are 65+ and women 60+?
A The current total stands at 280,000.
Q How many people reach formal retirement each year in Northern Ireland?
A A further 16,000 are added each year.