Everyone wants to retire comfortably — no more fretting about income or finances for the rest of your life. But saving for your golden years is easier said than done, and with ageism present in the workplace, it’s becoming even more difficult. Some firms refuse to hire anyone older than 65 because they believe that younger applicants are more mentally capable. While this isn’t always true, you cannot deny that it’s a huge hurdle for sexagenarians who are still in need of a stable income source.
One means of building wealth for retirement is through pensions. State pensions can be claimed once an Irish citizen reaches 66, the current state pension age. Others opt to apply for private pensions. However, it was found that nearly half of Ireland’s workers have no private pension, primarily because they need to meet day-to-day expenses and bills. Most simply can’t afford a private pension. This leaves an occupational pension or employees’ pension, which is provided by your employer. But this, too, is plagued by multiple issues, most notably the employees’ pension savings gap.
The employees’ pension savings gap and issues surrounding it
A pension gap is the amount an individual is currently saving versus the amount they’ll need to live on comfortably after retirement. The pension gap in Ireland is one of the highest in Europe, second only to the UK. In the UK, the statistics on retirement expectations vs. reality are just as worrying. The average pension pot of a UK retiree is £50,000 (€56,240) — just one-sixth of the ideal amount of £300,000 (€337,441) — and this can also vary based on age group. In Ireland, the ideal pension pot is €280,000, not a far cry from the UK’s. Moreover, studies show that the pension gap in Ireland increased in size by 38% since 2010. This is massive, compared to the 6% increase across Europe.
Employees’ pensions are generally affected by the companies they work for. 75% of working citizens are not provided with a company pension, even though employers are legally required to give them access to one.
There is also a gender pension gap, affected by multiple factors, such as the ongoing pay gap and the fact that more women than men remain occupationally inactive due to care reasons. This gender gap stands at 22% and continues to increase as the years go by. This is a problem for Europe as a whole, where the total gender pension gap is at 36%.
The pandemic only further exacerbates these issues. Thousands of Irish employees were laid off, preventing them from adding to their pension pot. In particular, millennials are struggling in the current recession, with many stating that massive unemployment has stopped them from reaching important milestones, like buying a house or even starting a family.
What can HR professionals do to help?
Luckily, HR professionals can lend a hand in improving the state of employees’ pension. One great idea is to offer two plans per employee — investment and asset protection. The former is what employees can use to grow their income, while the latter is simply where they store it. This gives employees a choice as to how they want to work on their pension.
Apart from this, make sure that the employees know their pension options, including those outside the company. This can be done through seminars or one-on-one consultations. After all, employees must understand their options. They won’t be able to utilise them otherwise.
Finally, consult with the company’s executives to ensure that company pensions are implemented fairly across the board. Hopefully, these individual efforts can decrease the country’s pension savings gap.
The HR Business Partner Story 