New reports on pension coverage and in-work poverty to be explored at ESRI Budget Perspectives 2027 event

Occupational pension coverage crucial for retirement income but not retirement timing

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 presented at the annual Budget Perspectives conference on 23rd June.

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.

Dr. Dora Tuda, an author of the report and Research Officer at the ESRI, said:

“While most employees retire earlier than they plan, those without occupational pension coverage face the greatest financial challenges. They not only retire earlier than expected but do so with significantly lower incomes, raising concerns about financial security in older age, especially for women.”

Siddhant Seth, an author of the report and Research Assistant at the ESRI, said:

“As Ireland rolls out automatic enrolment, expanding occupational pension coverage will be key to improving income adequacy in retirement, even if it might not substantially change the average retirement age.

This research highlights the importance of continued monitoring to assess whether expanded pension coverage improves retirement outcomes and reduces gender inequalities.”

Increasing working hours alone will not eliminate in-work poverty, new ESRI research finds

Increasing working hours would help some low-income workers escape poverty, but a substantial share would remain below the poverty line even at full-time hours, according to new research from the Economic and Social Research Institute (ESRI), to be presented at the Budget Perspectives 2027 conference on 23rd June.

Using the ESRI’s microsimulation model, SWITCH, the research estimates that around 5 per cent of workers are currently at risk of poverty (AROP) in Ireland (114,000 workers). Among the in-work poor who work part-time (74,000 workers), around half could escape poverty by working more hours. This would reduce the AROP rate among workers to around 3%. The workers who would remain below the poverty line tend to face structural challenges to escaping poverty, including low hourly pay, self-employment, larger families and the absence of a second earner.

Reforms to the Working Family Payment (WFP), the main welfare support for low-income working families, could achieve similar reductions in poverty. Currently, just half of eligible households take up their entitlement to the Working Family Payment. Full take-up of this payment by eligible households could reduce in-work poverty from 5% to around 3.5% (a reduction of 29,000 workers). Extending eligibility for the Working Family Payment to childless households could reduce it further to around 3 per cent, although this would involve substantial additional public expenditure and may be less targeted.

The study shows that while additional hours of work can help some households increase their income, it is not a universal solution to in-work poverty. Even when workers increase their hours to a maximum of 40 per week, many remain below the poverty threshold due to factors such as low wages and the number of dependents sharing household income. There are also practical constraints on increasing labour supply. Many of the in-work poor face care responsibilities, limited availability of full-time jobs, or health-related barriers, making longer working hours difficult or impossible.

The research highlights a key role for the welfare system in supporting low-income workers. In particular, there is significant scope to reduce in-work poverty through improved take-up of the Working Family Payment.  

Dr. Karina Doorley, Associate Research Professor at the ESRI and co-author of the report, said:

“Increasing working hours can make a meaningful difference for some low-income workers, but it is not always an option. Many workers would remain below the poverty line even at full-time hours, highlighting the importance of in-work supports such as the Working Family Payment.”