Monday, 12 September 2016 03:53

Future Retirees need to save an extra €1000 per month

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The gap between pension savings and pension income is growing, and Ireland is in the most precarious position in Europe says a report by insurer Aviva. To maintain the same level of pension that a retireee would have received in 2010, a persion would need to save an additional €1000 per month. The situation has been excerbated by three factors:-

  • Lower investment returns;
  • more expensive annuities;
  • the 5yr freeze in the state pension from 2010-2015.
  • The OECD target is that a person should receive a pension of  70% of pre-retirement income. The report states that a person retiring next year would receive just 46%.  It's reported that this figure willl reduce to 40% by 2057. Lower earners are assumed to require an income of 90% of pre-retirement income whereas middle earners are assumed to need 65%.

    The deficit depends on both age and current income level. A person aged 20 would need to increase pension savings by €4,400 per annum, whereas in 2010 that figure would have been €1,700.

    Increase in annual contributions required by Age

    Age Additional Contribution
    30 €5,100
    40 €6,700
    50 €9,700
    60 €28,000

     Aviva provide an online pension gap calculator


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