Start your pension early or risk getting by on €28 a week

Put your pension on the long finger and you could have to retire on €28 a week. This is the kind of pension you could end up with if you wait until your 60s to open one, writes Louise McBride from The Independent.


Although most of us don’t wait that long to start one, many of us will retire on a measly pension because we have started to pay into it too late – and the contributions we’re paying are too low.

The average person starts paying into a pension at the age of 37, according to a recent study by Irish Life.

Put off paying into one until then, however, and you could end up with a pension of about €7,900 a year (€152 a week) when you retire, according to the study. This assumes you’re earning €46,000 and paying 10pc of your salary into your pension.

Of course the State pension will bump up your pension by €11,975 a year – as along as you’re entitled to it. So if you’re eligible for the full State pension and have a private pension worth €7,900 a year, your total pension would come to €19,875 a year. This could still come as a shock if you’re used to a salary of €46,000. The shock will be even greater if you’re not eligible for the full State pension, which can often be the case.

As many defined benefit schemes – which have traditionally ‘guaranteed’ to pay a percentage of your salary when you retire – have run into financial difficulties in recent years, there is a growing shift towards defined contribution schemes. With a defined contribution scheme, the value of your pension depends on how much you and your employer (if they choose to do so) pays into the pension scheme over your working life – and how well that money was invested.

So if you haven’t yet started to pay into a pension, chances are you’ll be joining a defined contribution scheme when you do so. But just how tiny could your pension be when you retire? Read the full article.

If you need any advice on getting started, we’re happy to help.

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