Aviva Research: Gender pensions gap alive and well

• Survey shows socioeconomic background has a major bearing on pension coverage
• Employer contributions biggest carrot for pension savers, followed by the knowledge of the importance of retirement planning and pensions tax relief

This research was originally published in the Business Post

The gender pension gap remains a stubborn reality in Ireland’s financial landscape with the number of women without a private pension far surpassing the number of their male counterparts lacking this financial security. According to a new survey from Aviva Life & Pensions Ireland DAC (Aviva), almost 4 in 10 (38%) women said they do not have a private pension, compared to just 1 in 4 (26%) men.

The survey was conducted by iReach Insights on behalf of Aviva, interviewing 1,000 people, including a 50/50 split of men and women aged between 25-65.

The research also revealed a sharp divide in pension coverage depending on a respondent’s socio-economic background. A staggering 50% of those in the C2DE category, a market research term used to describe the working class as it largely includes manual, casual and low-level workers[1], do not have a private pension in place, compared with just 20% of respondents in the ABC1 category, the term typically used to describe the middle class as it largely includes workers in professional, higher managerial and administrative roles.

The Aviva survey shows that one of the primary drivers of starting a pension was the offer of employer contributions for 52% of respondents, followed by the knowledge of the importance of retirement planning (24%), and by the tax relief on pension contributions (20%).

A substantial proportion of our population (33%) do not have a private pension. This means many people could be facing a financial shock when they retire as they are likely to be dependent on the State pension, which at the current maximum rate of €265.30 a week[2], would be a struggle for many to get by on. Failure to save into a private pension has huge repercussions for people’s quality of life when they come to retirement age. Indeed, more people are now encountering poverty in retirement than ever before, with a recent Central Statistics Office survey finding that the largest year-on-year change in the at risk of poverty rate was in persons aged 65 or over – with that rate increasing from 11.9% in 2021 to 19% in 2022[3].

The gulf between pension provision for men and women is also a concern. Four in 10 women reported to not having a private pension. Recent research by the ESRI found that the average pension income of retired women is 35% lower than that of retired men[4]. That’s a huge disparity of income for women at that stage in their lives. It’s crucial that the challenges women face when it comes to pension saving are addressed and that more can be encouraged and facilitated to save for their future. Similarly, the findings point to a huge socio-economic pension gap in Ireland, which cannot be ignored.

Eoin Kennedy, Aviva Life & Pensions Ireland

Other headline findings from the Aviva survey reveal that:

• Couples and households with children were more likely than single people to have started saving into a pension because they knew the importance of planning for retirement. Furthermore, men are more likely than women to say they started pension savings for this reason (26% versus 21%).
• The tax relief on pension contributions enticed almost twice as many men (25%) as women (14%) to save into a private pension.
• Interestingly, a significant portion of those aged between 25 and 34 were prompted to start a pension because they understood the importance of retirement planning – with almost one in three (30%) of this age cohort saying that they did so compared to less than one in five (17%) of those aged between 45 and 54.
• The lure of pensions tax relief proved strongest for those aged between 55 and 65 with more than 1 in 4 (27%) of this age cohort saying this had prompted them to start saving into a pension compared to less than 1 in 5 (17%) of those aged between 25 and 34.

Eoin Kennedy added:.“Understanding what drives people to start a pension is crucial if we want to increase coverage across the country. We as pension experts need to know what messages resonate with people – what will make them want to act in their own best interests. And if they are facing hurdles, we need to know what exactly they are so that we can come up with ways to remove them from the path of would-be pension savers. The importance of employer contributions and pensions tax relief are obvious from the findings. And so too is education around the importance of retirement planning.”

Other findings to emerge from the survey include:

• The most common age to start saving into a pension is between the ages of 26 and 30 with almost 1 in 5 (18%) doing so at this age.
• While 4 in 10 (39%) men said they had started a pension by the time they were 30, just 1 in 3 (33%) women had done so.
• Less than one fifth (17%) of people start a pension between the ages of 18 and 25.
• People in Dublin are far more likely than any other region to have a private pension – almost 8 in 10 (79%) Dubliners said they had a private pension compared to just over half (56%) of those living in Connacht and Ulster, and more than one-third (36%) of those living in Munster and elsewhere in Leinster.
• For 1 in 10 (10%) people, starting a pension was something they had always been planning to do but did not get around to it until later than planned.

“Starting a pension between the ages of 18 and 25 could boost your pension fund yet the majority (83%) of this age cohort do not do so, despite this being the time many start their working lives. It is understandable that many people in this age cohort do not give pensions a second thought because retirement is simply so far off their radar, yet starting a pension at this age could make a difference to peoples’ retirement income down the line. More needs to be done in schools and colleges to educate those entering the workforce about the value of starting a pension early”, concluded Eoin Kennedy.

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