by HRHQ Editorial Team
Employees with and without occupational pension coverage retire earlier than planned, but those without occupational pension coverage face substantially lower incomes in retirement, according to new ESRI research.
Ireland has historically relied heavily on the State pension as the primary source of income in retirement. While occupational pension coverage has risen steadily in recent years, a substantial share of older employees still approaches retirement without supplementary pension provision. The research examines how occupational pension coverage relates to both the timing of retirement and income adequacy in retirement.
The findings show that employees with occupational pensions plan to retire earlier (around age 63.5) than those without occupational pension coverage (close to the State pension age of 66). However, in practice, both groups retire at a similar average age of around 61.
The gap between planned and actual retirement age is particularly pronounced among women without occupational pension coverage, who retire on average at around 58.5 despite planning to retire closer to 66.
Although retirement ages are similar for those with and without occupational pension coverage, this research highlights differences in retirement incomes. Individuals with occupational pension coverage have a median weekly retirement income of approximately €460, compared to €230 for those without coverage. This difference is driven almost entirely by occupational pension income, as State pensions and benefits are similar across both groups. The gender pension gap is driven by occupational pension coverage, as men and women without occupational pension coverage receive similar weekly income.
The results suggest that occupational pension coverage plays a crucial role in ensuring adequate living standards in retirement but has limited impact on the timing of workers exiting the labour market.
