The results of a study called “The New Retirement Reality” carried out by FPSB Ireland was published recently. In it, they found there is a huge gap between people managing their day to day finances and being ready for retirement. 74% of employees believe they manage their day to day finances well but just 21% are financially prepared for retirement (10% of 55 – 64s).
This isn’t a surprise to us in the advisor community. More and more pension schemes are run by big organisations like Mercer and Aon, companies that are scheme administrators. They offer no advice to the members of the schemes, even telling them to get independent financial advice if the member wants some advice on what fund to invest in. It is not until the member nears retirement and the lucrative retirement options are issued that these employees are being offered access to a financial advisor who wants to sell them an ARF or an annuity.
While 72% feel they manage their finances well, many people that I talk to do not have good financial habits. They do not save regularly and the mandatory pension scheme is the only regular saving that they do. But even then, they don’t know what the pension will get them in the end and whether it will be enough for them. They get issued statements each year but the projections are irrelevant because no one asks them what they want to do in retirement and how much it is going to cost.
The study also found that 32% of employers offered a retirement planning programme and 65% of these are 1 – 5 years from retirement. That is too late. Five years out is just 60 pay cheques to fix gaps from a lifetime of saving mistakes. Compounding takes time and you cannot cheat time. If gaps in your retirement planning are identified decades out, it can be fixed. If it is a year out, your options are either work longer or spend less in retirement.
While employees get a lot of benefits such as generous pensions, risk benefits, share options etc, they are not given advice. If they don’t have an interest in personal finance, they will go through their career making mistakes with their finances. They won’t understand investment risk, thinking that investing in the biggest and most successful companies in the world is high risk. When we ask clients what they think of when we say risk, they think of losing their money and not getting it back, not it falling in value and recovering. But they are told investing in equities is high risk, so they avoid them. Investment strategy for employees is a tick the box function where everyone is put in the same box as the trustees obligations are then met.
Employees need to be guided more. Is it their employer’s obligation to provide that advice? I don’t think so. Financial planning isn’t cheap and isn’t suitable everyone. A starting point is certainly the pension administrators doing a bit more than just administrating the scheme and actually talking to the employees about the different funds they are investing in instead of sticking them into a lifestyle strategy or whatever fund a useless risk profiling tool tells them to invest in.
We need to do better for employees and give them the information they need to make informed decisions on their own money.
Steven Barrett
18 May 2026