Amarach Research and UCD Geary Institute Pensions Research March 2012
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Attitudes to Opt Out Pensions
A Report by
and
March 2012
2
A. Background & Objectives
B. Omnibus Methodology
C. Profile of Sample
MAIN FINDINGS:
SECTION 1: Current Pensions
SECTION 2: Plans for Retirement
SECTION 3: New Pension Scheme
SECTION 4: Long-Term Orientation
SECTION 5: Snyder Hope Scale
KEY RESEARCH FINDINGS
Table of Contents
3
The UCD Geary Institute conducts research on life course issues
and the way in which public policy affects life outcomes and
development. Central to this is a unified methodology and
cross-disciplinary perspective which allows it to create effective
solutions to economic, political, epidemiological and social
questions in Ireland.
In 2014 a new pension scheme will come into effect, whereby
individual’s without a pension will enroll in a new government
scheme paying 4% of their income to the fund annually. This will
be met by a further 2% by the individual’s employer and the
government.
The main objective of this research is as follows:
A. Background & Objectives
To gain an understanding of Irish people’s attitudes towards the
new pension scheme, looking at present pension behaviour as well
as anticipated behaviour in light of this scheme.
4
• A series of questions were placed on Amárach Research’s
omnibus to investigate attitudes towards the new pension
scheme amongst the Irish populous.
• The omnibus is a syndicated service whereby clients can include
questions within the survey.
• A nationally representative online sample of 1,000 adults aged 16
years or older was used. Quotas were applied across gender,
age, social class and region to ensure the sample is fully
representative. A sample of 1,000 provides a sufficient base to
be able to conduct statistically robust sub-group analysis across
age ranges, social class and region.
• Interviewing is conducted on a monthly basis.
• The fieldwork in this research was conducted in October 2011
B. Omnibus Methodology
5
C. Profile of Sample
1728
4822
52
19
2816
1826
49
27
51
(Base: All Adults aged 18+ - 1005)
Female
% % % %
Male
15-24
35-44
45-54
55+
Dublin
Rest of Leinster
Munster
Conn/ Ulster
ABC1/ F50+
C2DE/ F50-
Gender Region
A nationally representative sample of Irish adults was utilised for this
research based on CSO figures.
Social
Class Age
25-34
MAIN FINDINGS
Section 1: Current Pensions
8
Employer’s Pension Scheme
27%
73%
%
Yes
(Base: All adults aged 18+ – 1,005)
Are you a member of an
employer’s pension
scheme?
No
Around 1 in 4 people are members of an employer’s pension scheme, with the majority
being male over the age of 35. Membership is significantly lower outside of Leinster
and, not surprisingly, membership is higher amongst the ABC1F50+ class. (Q.1)
Gender
Male
Female
Age
15-24
25-34
35-44
45-54
55+
Region
Dublin
Rest of Leinster
Munster
Connaught/Ulster
%
All with Employer’s Pension
Scheme - 269
32
22
9
22
34
34
33
29
30
25
21
9
Your Pension
18%
18%
50%
14%
%
(Base: All adults with a pension – 385)
Pension
type
(Q.2)
Don’t Know
Don’t have a
private pension
Defined contribution
or money purchase
Defined benefit
14% of individuals surveyed did not
know what type of pension they had,
highlighting the current lack of
knowledge surrounding pension
schemes and plans. Considering the
recent fluctuations in the economy
greater clarity will be needed on
pensions as an OECD report found
that Irish pensions lost 40% of their
value last year.
10
5
323
60
17
6
Pension Contribution Rate
%
(Base: All adults who contribute to their pensions– 426)
58% of respondents either made no contribution to their pensions or were
uncertain as to the amount.
(Q.3)
17
8
26
20
29
0-10%
10-20%
20-30%
30-40% 40-50% 50-60%
Percentage Contribution
(N = 258) Monetary Contribution
(N = 168)
Less than €100
€100-€500
€500-€1,000
€1,000-€5,000
€5,000+ 60-70%
%
Section 2: Plans for
Retirement
12
Estimated Retirement Age
(Base: All adults aged 18+ – 1,005)
(Q.4)
23
8
23
36
64
5
0
10
20
30
40
Before
50
50-54 55-59 60-64 65-69 70-74 75+ No
intention
51% of respondents do not plan
on retiring until after the age of
65 which is significantly higher
than the current employment
rate for that age group in
Ireland (33%) (Source: CSO.ie, Quarterly National Household
Survey)
13
Adequate Income Sources for Retirement
35%
22%43%
% Yes –
Adequate
Resources
(Base: All adults aged 18+ – 1,005)
TOTAL
No –
Inadequate
Resources
Over half (52%) of 35-44 year olds feel that they will not have adequate resources for their
retirement, even though their pension contributions are similar to other age groups.
(Q.5)
Gender
Male
Female
Age
15-24
25-34
35-44
45-54
55+
Region
Dublin
Rest of Leinster
Munster
Connaught/Ulster
%
Inadequate Resources for
Retirement
Not Sure
45
41
26
41
52
49
44
38
46
46
40
14
Estimated Adequate Income During Retirement
(Base: All adults aged 18+ – 1,005)
The younger generation expects to need much less income per week when they retire which
either represents a lack of appreciation of costs and expenditures in retirement or an
adjustment to lower incomes experienced during the recession. (Q.6)
6
35
28
15
64
23
0
10
20
30
40
200 or
less
300-400 400-500 500-600 600-700 700-800 800-900 1,000+
27% of respondents aged over
25 thought that more than €500
was an adequate living amount
per week, whereas only 40% of
15-24 year olds estimated that
this was necessary.
Euro amount per week
necessary during retirement
Section 3: New Pension
Scheme
16
Opt In/Opt Out of New Scheme
30%
18%
35%
17%
%
(Base: All adults with a pension – 385)
New Pension Scheme
Participation
Only 17% of respondents said they would opt in to the new scheme. Female’s and those from
Connaught/Ulster were least likely to opt in as they weren’t sure. Information regarding the
scheme will needed to be targeted at these cohorts so they can make an informed decision. (Q.7)
Gender
Male
Female
Age
15-24
25-34
35-44
45-54
55+
Region
Dublin
Rest of Leinster
Munster
Connaught/Ulster
%
OPTING IN
Don’t Come
Under it’s Effect
Don’t
Know
Opt
Out
Opt
In
22
13
18
23
17
14
14
18
16
21
12
17
Attitudes Towards Proposed Plan
%
(Q.8)
%
(Base: All adults aged 18+ – 1,005)
I Don’t Come Under It’s Effect
I Will Not Opt Out As It Seems Like A Good Deal
I Don’t Understand It
I Already Have a Pension
I Will Opt Out As I Don’t Trust The Government
I Will Already Be Retired
I Will Opt Out As I Can’t Afford The Money
I Will Not Opt Out But Change My Contribution Rate
I Will Opt Out As I Don’t Trust My Employer
30
14
11
9
6
5
5
4
2
18
47% of respondents felt that 4% was
an appropriate amount, combined
with the further 4% provided between
the employer and the government the
contribution is 8%. This is similar to
the amount 60% of respondents with
employer pension schemes currently
contribute.
Attitudes Towards 4% Rate
15%
47%
12%
26%
%
1 in 4 felt the contribution rate was either too high or too low and so the provision for
alternative contribution rates may have to be established to attract the majority of individuals.
(Q.9)
(Base: All adults aged 18+ – 1,005)
Too
High
Don’t
Know
Too
Low
Approximately
Correct Government Employer
Individual
Section 4: Long-term
Orientation
20
Geert Hofstede’s cultural dimension’s theory is one which helps to explain
differences between individuals from different cultures across six value
dimensions:
– Power distance
– Individualism
– Uncertainty avoidance
– Masculinity
– Long term orientation
– Indulgence
Long-term orientation describes societies’ time horizon. Long term orientated
individuals attach more importance to the future, including pragmatic values
orientated towards distant goals and rewards. This way of thinking is usually
associated with Eastern countries, i.e. China, Hong Kong, and Japan.
Short term orientated individuals are more concerned with the past and the present,
placing importance on steadiness, respect for tradition, reciprocation and fulfilling
social obligations. This way of thinking is usually associated with Western
countries, i.e. America, Europe, etc.
People who are long-term orientated are likely to be more actively involved in
preparation for the future which includes maintenance and growth of their
pensions. This analysis allows us to see how much importance people place on
future preparations across multiple demographics.
Long-term Orientation (Hofstede) -I
21
The LTO index is based on three questions: If there is something expensive you really want to buy but you do not have enough money, what do you do?
– I always save before buying – I usually save first – I sometimes save, sometimes borrow to buy – I usually borrow and pay off later – I always buy now and pay off later
Are you the same person at work (or at school if you’re a student) and at home?
– Quite the same – Mostly the same – Mostly different – Quite different – Don’t know
To what extent do you agree or disagree with each of the following statements?
– Disagree Strongly (1) – Agree Strongly (5)
Persistent efforts are the surest way to results We should honour our heroes from the past The LTO index normally has a range of about 100, e.g. China (118), Hong Kong (96) versus United States (29) and the UK (25).
Long-term Orientation (Hofstede) - II
(Source: Hofstede, 2002. Human relations)
22
Long-Term Orientation - I
30%
36%22%
9%3%
If there is something expensive you
really want to buy, what do you do?
66% of respondents claim to save before purchasing although considering the current
economic climate this may be difficult to maintain. 78% of respondents act the same at home
as they do at work although this claim may be due to a self-image bias rather than objectivity.
(Q.1)
25%
53%
9%
8%5%
Are you the same person at work as
you are at home?
(Base: All adults aged 18+ – 1,005)
% %
I Usually
Save
First
I Always Save
Before Buying
I Usually Borrow and
Pay Off Later
Sometimes
Save,
Sometimes
Borrow
Mostly
The
Same
I Always Buy Now
and Pay Off Later
Don’t
Know Quite
The
Same
Mostly
Different
Quite
Different
23
28
26
31
12
2 3
43
32
19
4
Long-Term Orientation - II
Persistent efforts
are the surest way
to results
Older cohorts agree more strongly with both statements and ABC1F50+ respondents are
more likely to agree with the statement that ‘persistent efforts are the surest way to results’. (Q.12a/b)
We should honour
our heroes from
the past
(Base: All adults aged 18+ – 1,005)
5 – Agree Strongly
4
3
2 1 – Disagree
Strongly
5 – Agree Strongly
4
3
2
1 – Disagree Strongly
24
64
55
41
63
67
63
59
Long-Term Orientation Scores
Respondents aged 15-24 (School/College years) place little importance on the future but it
becomes much more of a priority by 25. This effect weakens with age as the future and the
present begin to juxtapose.
Gender
Male
Female
Age
15-24
25-34
35-44
45-54
55+
Region
Dublin
Rest of Leinster
Munster
Connaught/Ulster
Social Class
ABC1
C2DE
(Base: All adults aged 18+ – 1,005)
%
59
64
57
55
54
64
Section 5: Snyder Hope
Scale
26
The Adult Trait Hope Scale was developed by a research team led by Charles Snyder in the late 80’s. They suggested that there are two major, interrelated elements of hope: Pathways thinking – the capacity to find routes to desired goals. Agency thinking – finding the motivation to actively pursue those routes.
Further research by Bailey and Snyder (2007) found that individuals between the ages of 55 and 64 were least hopeful. This was put down to poor ‘Pathways thinking’ scores which indicates that older cohorts are less capable of determining how they would achieve their goals, perhaps in light of their on-coming retirement. This research also found that separated/widowed/divorced cohorts were less hopeful than their married or single counter-parts. No differences were observed on the individual aspects of the scale so the researchers suggested that a loss of hope may occur as these individual’s have to achieve their goals by themselves.
Trait Hope Scale (Snyder) - I
27
The scale itself is made up of 12 questions: Four ‘Agency
Thinking’ questions, four ‘Pathways Thinking’ questions and four
fillers.
Participants answer on a 8 point likert scale from ‘Definitely
false’ (1) to ‘Definitely True’ (8).
Trait Hope Scale (Snyder) - II
I energetically pursue my goals
My past experiences have prepared me well for my future
I’ve been pretty successful in my life
I meet the goals that I set for myself
I can think of many ways to get out of a jam
I can think of many ways to et the important things in life
There are lots of ways around any problem
Even when others get discouraged, I know I can find a solution
Agency Thinking
Pathways Thinking
28
Trait Hope Scores
Participants scored similarly on both the ‘Agency Thinking’ and ‘Pathway Thinking’
segments of the Trait Hope Scale across all demographics. Scores of 45-50 indicate
that our sample is relatively hopeful, and is similar to Bailey and Snyder’s (2007)
American sample. (Q.10,11,12)
22
22
22
21
21
22
24
23
22
22
22
22
23
24
45
44
44
43
43
44
48
23
22
22
22
23
22
23
22
22
22
23
22
46
44
45
44
46
44
Gender
Male
Female
Age
15-24
25-34
35-44
45-54
55+
Region
Dublin
Rest of Leinster
Munster
Connaught/Ulster
Social Class
ABC1
C2DE
(Base: All adults aged 18+ – 1,005) Agency Thinking
Pathway Thinking
Hope Score
29
The results from the Trait Hope Scale are surprising in that the mean scores for the segmented cohorts ranged between 42.69 and 47.69, suggesting the respondents were quite hopeful. Previous results from Bailey and Snyder (2007) indicate that older cohorts usually experience lower hope, although the opposite has been found here with respondents aged 55+ scoring slightly higher than others. Two theories could explain this finding: – The older respondents in Ireland are more hopeful than in
Bailey and Snyder’s (2007) sample, or – The younger sample are less hopeful
Given the current economic climate, in particular the employment market, we could suggest that younger people feel that there is little available to them in Ireland, a theory which is supported by the predicted emigration figures of 50,000 by The Economic and Social Research Institute.
Interpretation of Trait Hope Scale Scores
Key Research Findings
31
Only 1 in 4 respondents were part of an employer’s pension scheme. 6 in 10 respondents with a pension contribute between 1 and 10%. Over half of respondents do not plan on retiring until after the age of 65. 43% of respondents do feel that they will have inadequate resources in their retirement. Younger cohorts expect to need less resources to live comfortably during their retirement. Only 17% of respondents said they would opt in to such a scheme although 30% were uncertain. Almost half (47%) of respondents said 4% is the correct contribution rate for the new pension scheme. Men were more long-term orientated than women and those aged 15-24 were the least so. LTO scores did not differ by region but C2DE respondents were more long-term orientated than their ABC1 counterparts. Hope scores did not vary across gender, age, region or social class.
Key Research Highlights - I
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