COVID-19 has impacted almost every aspect of people’s lives globally. Whilst the short-term financial implications of the pandemic are front of mind for many individuals, we were interested to see whether these worries will change long-term savings behaviour. In this year’s Global Retirement Reality Report (GR3), we investigate the impact that COVID-19 has had on personal finances and behaviour around retirement planning. In this overview, we share the results of our survey of Irish defined contribution (DC) pension scheme members.
COVID-19 is among the top three reasons given by Irish savers for having low retirement confidence. Whilst the majority expect the financial impact of the pandemic to be short-lived, Irish savers are already showing a degree of reaction to the crisis in their retirement savings. Compared with the other countries surveyed, a greater proportion of Irish savers:
Have checked their retirement savings balance more regularly
Have reduced or stopped contributions
Are willing for their employer to pause contributions to help their businesses survive the crisis
With the plans for pension reforms in Ireland progressing, these results stress the importance of having a system built around automation and inertia, requiring minimal engagement and action from members.
We were pleased to see a good sense of awareness from members about the risks of overreacting to market events and “selling at the bottom,” with more than half of the sample believing now is a good time to invest for the long term. Only 16% of members felt that they should sell stock market investments and switch into something lower risk. Members also showed an appreciation for lower volatility strategies and for companies that are being managed responsibly with regard to the crisis. These findings provide useful insight into the kinds of funds members would like to see their savings invested in.
Key Finding #1: Almost 40% of Irish savers have experienced a deterioration in their financial situation since the COVID-19 outbreak
We began by taking a pulse check on the current financial situations of individuals, compared with the period before the COVID-19 outbreak. In Ireland, 71% of the sample had been impacted in some form, such as having reduced pay or reduced hours, a higher proportion compared with the other countries surveyed.