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Savers outnumber spenders but new research indicates increase in those planning to spend SSIA funds
The Irish Insurance Federation (IIF) announced today (Sunday 22nd May) details of a recent consumer survey, which looks at SSIAs, pension cover and consumer attitudes to the retirement age. The research reveals that as maturity dates approach consumers' plans for the use of their SSIA proceeds are starting to clarify. It also indicates differences between the age at which people would like to retire and the age they expect to retire, and that the difference varies markedly between older and younger workers.
Key findings of the research are:
A majority (53%) of SSIA owners expect they will re-invest some or all of their SSIA funds. However, 19% confirm that they plan to spend some or all of these funds immediately, up from 8% in 2004.
68% of SSIA holders think that the Government should incentivise the transfer of SSIA proceeds into pensions.
Most people (59%) would like to retire before they are 55. As it approaches however, there seems to be more realism about actual expected retirement age with a majority of over 55s (67%) expecting to remain in the workforce to age 65 or later.
One in four of workers under 65 (23%) do not know how they will fund their retirement, while another 26% expect that that the state pension will be their main income source in retirement.
Amongst those who do not have a personal or company pension, procrastination and affordability are seen as the main barriers to starting a pension. 26% of respondents without a pension stated they “haven't got around to setting up a pension yet” and 23% stated they “can't afford a pension”.
Michael Kemp, Chief Executive, Irish Insurance Federation, said:
“We are concerned at the increased proportion of consumers who plan to spend rather than save their SSIA proceeds. We believe that the opportunity created by the SSIA scheme will be lost if measures are not introduced to incentivise individuals to transfer some or all of these funds into pension or similar savings products.
IIF has already proposed to Government that financial incentives are introduced to encourage SSIA account holders to reinvest in retirement savings. In our last Pre Budget submission we recommended a waiver of the SSIA tax liability of 23% if the saver puts at least 50% of the total SSIA maturity value in a personal pension. We also recommended a one-off lifting of pension contribution limits to facilitate such reinvestment of SSIA funds. Given that more people are now planning to spend their SSIA savings we call again on Government to consider these proposals ” he continued.
The research was conducted by Lansdowne Market Research on behalf of the Irish Insurance Federation and took place between March and April 2005. A nationally representative sample of adults aged 18 and over were included in the survey.