Stop putting it off: Your pension is the most important investment you’ll make

Colette Sexton, news correspondent at The Sunday Business Post, on why you should start saving for a pension now.

Most of us could not survive without a regular pay cheque to keep bills paid and ourselves fed and clothed. Yet for some reason, people seem to think that retirement will come along and they’ll suddenly no longer need that regular income to keep them ticking over. Either that, or they are sticking their heads in the sand. Pensions are vital to maintaining a good quality of life in retirement and unfortunately, women are the worst culprits for ignoring the problem until it is too late.

Nearly two-thirds (63 per cent) of Irish women have no pension provision. Over half (55 per cent) have never considered getting one, and in addition, just 6 per cent of Irish women see pensions as a high priority, according to a survey from Aviva. In contrast, men are much more proactive about planning for their retirement. Almost half of men (47 per cent) have a pension, compared with only 37 per cent of women, which represents a pension pay gap of 10 per cent. This number has remained stagnant since 2014, according to Aviva.

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This is very worrying as a lack of financial security leaves women vulnerable. First of all, women tend to live longer than men so they will need their money to last longer. As well as that, some women take long periods out of the workforce to care for children or relatives, and this can impact on the amount of state pension entitlements that they can claim.

If you are in your twenties or thirties, the easiest way to begin a pension is to start small and constantly build on it. Every time you receive a pay rise, increase the amount you are putting into your pension. Tax relief on pensions is 40 per cent, which is a great tax break by anyone’s standards. So for every €60 you put in every month, €100 goes into your pension fund.  

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If you are older then you will have some catching up to do, so you will need to start putting a higher amount into your pension. A good rule to keep in mind is that for every decade you do not begin a pension, you double the cost of how much you’ll need to save to get to the same financial position when you retire. Do not despair if you are in your forties, fifties or even sixties though — it is better to start late than to never start at all. It is easy to put pensions on the long finger but you will be kicking yourself when you’re older if you do not take action now. Do it today.