Ireland. Using pension pots to buy homes makes sense – and will boost enrolment rate
Large numbers of Irish people are not saving for retirement, and the Government is taking the very sensible step of ensuring that, from 2022, workers are automatically enrolled into a pension plan.
Anyone who wishes to opt out will be able to do so, but the hope is that most people will be gently nudged onto a path towards a decent standard of living in retirement.
To minimise the numbers opting out, people must be convinced that pensions are genuinely attractive. This is something which, despite real and valuable incentives, pension providers, employers and governments globally have had very limited success with to date.
Low interest and engagement with pensions is caused partly by our instinct to think mainly in the short term – an evolutionary aspect of our humanity that cannot be altered.
However it is also related to the perfectly rational desire of people in their 20s and early 30s to prioritise getting a house deposit over saving for retirement. The risk is that, whatever incentives are offered, many of these individuals will opt out of auto-enrolment – and may get comfortable being opted out.
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