Existing Customer Hub
By: Maeve MacEnri, Director of Human Resources, KBC Bank Ireland
There is a lot of talk about pensions at the moment and it is a key issue for all employers. The latest OECD data highlights that average ages in Ireland have increased—the average Irish man is now expected to live to nearly 79 and women to over 83.
That currently means 15 years or more of retirement. In addition to this, on average 20,000 people per year are expected to reach the pension age of 66 between now and the end of this decade. Access to the State pension too is rising to 68 by 2028.
Bearing these figures in mind—there seems to be a lot of uncertainty surrounding retirement which means planning for pensions has never been more crucial. I would recommend that employees start taking ownership of their pensions sooner rather than later to ensure that they are well covered for retirement.
At KBC, it’s of paramount importance to us to look after our employees. We offer a Defined Contribution pension scheme with market leading employer contribution rates for all of our employees. The aim of this is to provide financial security to them and their family. Each employee has access to their own pension account on-line or through their mobile device. This allows them to amend their contributions, make Additional Voluntary Contributions (AVCs) and manage their investment decisions. A projection tool also allows employees to look at the amount they need to save now so that they can live comfortably at retirement.
The income tax relief available for pension contributions makes it more efficient to save for retirement inside a pension plan rather than outside one. Employees automatically receive tax relief on the amount paid into the pension subject to Revenue limits.
Awareness however is still the biggest challenge. Employees tend to put pensions and pension contributions on the long finger. However, we have seen millennials getting better at planning and preparing for the future. In my experience, people tend to prioritise pension contributions around the age of 40. At KBC, awareness is key to getting our employees to engage—we focus on it at employee induction, through pension newsletters and later this year we are having a pension awareness week. The aim is to really get employees engaged on their options for retirement planning.
The ‘job for life’ mentality is not as prevalent in modern day Ireland; people are now moving jobs more frequently and they need to prepare for this. Through-out my career, a common theme I have come across is a person asking, “What happens to my pension if I leave?” The answer to that is—you can take it with you. Defined Contribution Pensions are transferrable when employees leave (subject to meeting services requirements).
With all of the uncertainty around pensions, the one thing that remains constant is that the sooner you start your retirement planning, the better. Why wait—you are never too young to plan for your future.