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The unspoken assumption with Ireland’s pension system is that you own a house

The country needs solutions for the increasing number of people who are renting as they hit pension age, writes Paul O’Donoghue.

FOR ALL THE discourse in Ireland around housing anxiety and pension anxiety, there isn’t enough that combines both these anxieties into one.

So, let us helpfully do it for you. We’ll start with the pension anxiety first.

There are normally a few reports every year which are cheerily headlined along the lines of ‘how much should I be putting into my pension to have a retirement not spent in crushing poverty’.

The latest was a report published a few weeks ago by the Pensions Council, which was carried out on their behalf by KPMG.

The headlines all carried similar variants of the same alarming information: single people would need about €33,000 a year from their pension to have a ‘comfortable’ retirement, according to the report. 

The state pension is currently about €1,200 a month, or €14,400 a year. So that means, theoretically, you would need the guts of €19,000 a year coming from your own private pension to make up the difference.

Then consider that about one third of private sector workers have no separate pension at all – and almost half of people plan to rely on only the state pension.

Ok, ok. So far, so bad. But it’s about to get worse.

Let’s dive into our second anxiety – housing. The Pensions Council report demonstrates how you have to own your own home for the sums to add up. Renting is essentially not even considered as viable.

To show this, let’s take a closer look at the report.

The study envisages three broad categories of retirees, based on how well-funded their pensions are.

‘Comfortable’ means being able to save money for unexpected bills, and even help out family members with financial expenses. This assumes a pension income of €2,800 a month for a single person or €3,600 for a couple.

‘Moderate’ is envisaged as someone who can meet their day-to-day expenses and travel without undue strain, but has to be careful with their money. The pension needed here is €2,300 a month for a single person and €3,100 for a couple.

And then ‘modest’ is defined as someone who only has their basic needs covered – they would need a pension of €1,600 a month, rising to €2,400 for a couple.

To cut to the chase: in all three categories, it’s expected that someone would have low or virtually no housing costs in retirement beyond bills and repairs.

The numbers don’t add up for renters

The researchers noted that for both the ‘moderate’ and ‘comfortable’ categories, they assumed the person would be ‘almost always a home-owner, with some money spent on home decorating’.

Even for someone with a ‘modest’ pension, the report notes this person would likely be ‘typically a home-owner, but may be renting (most commonly from a local authority)’.

Basically, the report assumes that pensioners will either be homeowners, or have state-subsidised housing. Renting privately is not really considered.

This is reflected in the assumed housing costs. It is assumed that a pensioner would spend a maximum of €900 a month on housing costs, including utilities.

To be fair, the report does acknowledge that its assumptions don’t really apply to private renters.

There’s even a specific caveat: ‘We realise that national averages will mask specific circumstances, such as renting in Dublin, material healthcare costs, or travel costs to see children abroad, that would all increase the amounts required to meet each of these subjective states.’

The thing is, the numbers don’t make sense for any pensioners renting privately, not only those in Dublin.

Given it’s estimated the average Irish household spends about €300 a month on electricity and gas, that would be about €600 a month left for housing costs (leaving aside for a minute other bills such as rubbish collection). 

Average rental costs across Ireland or existing tenants right now are €1,400, while the figure is up to €1,600 for newly-registered contracts. The upshot? €600 is unlikely to go very far in the private rental market.

And even if you somehow miraculously found a place at that price, with inflation or new tenancies rising at just over 8% a year, if the landlord evicted you for any reason, your chances of finding another in a year or two would be roughly zero.

And it’s not like we can just pretend private renters don’t exist in old age – they do.

Ireland’s home ownership has been falling relatively slowly but steadily, dropping from 70% in 2011, to 68% in 2016, to 66% in 2022.

As this number falls, there will be a rise in the number of people relying on the private rental market, even into old age.

This is a phenomenon which we can already see being borne out.

Census figures compiled by the CSO show the number of people aged 65 and over who are renting has surged in recent years, almost doubling from 30,800 in 2011 to slightly under 54,000 in 2022.

In such a short space of time, this is a major increase. And it’s a number which is likely to keep growing as house prices continue to rise and ownership rates contract.

But we’ve already established that our pension system basically assumes that people will own a home once they hit retirement age.

What happens when that doesn’t happen?

Let’s go back quickly to the numbers for a ‘modest’ income household.

It’s assumed that a single person would have a total pension income of €1,600 a month, with most of this coming from the state pension.

Housing costs, including bills, are meant to be only €600 a month. But average private sector rents, even for existing tenants, are €1,400 a month – basically equal to the hypothetical pensioner’s entire monthly income.

Quite simply, the sums don’t add up.

Let’s talk about solutions

So, what happens?

As things stand, the most likely outcome is those retirees who have to rent face living in – or near – poverty.

It’s harsh to say but this is the reality non-homeowners relying on the private rental market face under Ireland’s current pension system.

Especially as it’s estimated about a third of older people rely on social welfare payments for 90% of their income.

While at the same time, more than one-in-three people aged 65 and over living alone are at risk of poverty.

Tens of thousands of people are already renting into old age with those numbers likely to swell considerably in the coming years and decades.

Ireland doesn’t tend to do long-term planning particularly well – take a look at any major infrastructure project, or the torturous process to get pension auto-enrolment up and running.

But the state should start looking at solutions now to help people who will be renting in the private market past retirement.

Ireland has already created a sovereign wealth fund. Perhaps swelling this and then using it to supplement pension incomes could be an aid.

Or a massively increased level of affordable rental accommodation – something which the state has already dipped its toe into with cost-rental projects.

Or perhaps something a bit more left-field, such as mass-printing cheap homes.

Whatever the solution is, it should be investigated and acted on quickly.

The alternative is that tens, possibly hundreds of thousands of people on lower incomes – many of whom will have worked for most of their lives – could end their days living in financial hardship.

This is something which should not be allowed to happen. And with some imagination and forward planning, doesn’t need to.

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    Install the app to use these features.
    Mute Mary Hinge
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    Apr 28th 2014, 4:35 PM

    Apparently Microsoft have contacted all five users of internet explorer to warn them…

    489
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    Mute Tom Keating
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    Apr 28th 2014, 8:03 PM

    If it was only that simple, 25% of the world browser users use IE versions 6 to 11, so this is a big deal and a big impact.

    37
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    Mute Anthony Byrne
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    Apr 29th 2014, 6:58 AM

    The usual hype. Its not like ‘all of a sudden’ there is a security flaw in IE version x y or z. There have been countless flaws in every version since for ever. Let there be no panic, no ‘serious problems’.

    4
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    Mute Were Jammin
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    Apr 28th 2014, 4:53 PM

    A quick workaround for XP users still using IE.

    1. Install chrome or firefox

    2. Slap yourself for not ditching IE sooner.

    389
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    Mute Pedro
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    Apr 28th 2014, 4:44 PM

    Windows 8 fails to hit expected targets.

    Microsoft ends support for XP.

    Shortly after, “massive” security issue found in IE.

    Microsoft state that they will be issuing a patch to fix the security issue however XP users will be left vulnerable.

    All seems a bit too convenient to me..

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    Mute SilentFugitive
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    Apr 28th 2014, 8:18 PM

    You have my vote Pedro.

    36
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    Mute Ali Fortune
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    Apr 28th 2014, 4:33 PM

    People still use IE?

    155
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    Mute Pedro
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    Apr 28th 2014, 4:45 PM

    Bank of Ireland’s Business Online tool only works with IE.

    115
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    Mute Tony Canning
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    Apr 28th 2014, 4:48 PM

    The most recent IE is actually good.

    52
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    Mute ƒR()§†H@X
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    Apr 28th 2014, 5:34 PM

    Apparently nearly 1 in 10 users still use it
    http://www.w3schools.com/browsers/browsers_stats.asp

    20
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    Mute Ian Mac Eochagáin
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    Apr 28th 2014, 5:35 PM

    Our production system at work only works with IE, and version 9 at that.

    29
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    Mute Joe Brennan
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    Apr 28th 2014, 8:00 PM

    It’s closer to 1 in 5 that still use IE. The stats you posted are only for users of the w3 schools site who would generally be more tech savvy

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    Mute B9xiRspG
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    Apr 28th 2014, 9:38 PM

    If software is written that only works on IE then it’s bad development and laziness on the coder part

    17
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    Mute Virtual Architect
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    Apr 29th 2014, 12:50 AM

    I stopped using BOIs business internet service because it was so appalling. I have to go to a bank machine or make a phone call to find out my bank balance. As for internet explorer- it is only used by people who don’t know much about security.

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    Mute Dave Davis
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    Apr 29th 2014, 3:55 AM

    Agreed. Bank of Ireland Business On Line is the most atrocious app online. It’s an absolute embarrassment and breaks every usability standard in existence. It looks and acts like it was whipped up in a 4th class Web design class. They charge a hefty fee for the privilege too. The only reason I still use it is because it’s the only bank that let’s you wire money to Serbia believe it or not. I hate not having a choice.

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    Mute Frank Carty
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    Apr 29th 2014, 8:39 AM

    On the contrary Jim, the opposite is true. Its very easy to develop site for FF and Chrome, compared to earlier versions of IE

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    Mute Marc Keegan
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    Apr 29th 2014, 5:03 PM

    I agree with Frank – It’s difficult to get a site to display correctly on IE and requires a lot more effort than FF or Chrome – It takes time, patience and a lot of experience to get a modern design to perform as intended on IE. (Also requires tears and a jade monkey paw).

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    Mute Leopold Dedalus
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    Apr 28th 2014, 4:35 PM

    “The security flaw puts almost all Internet Explorer users at risk”

    Those 30 people must be very worried

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    Mute Frank
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    Apr 28th 2014, 4:37 PM

    A deliberate move by Microsoft to scaremongering operators of XP to upgrade to more NSA hackable and imposing systems with built in cameras and back door snooping technology. It will be a long time before I leave from XP.

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    Mute Tony Canning
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    Apr 28th 2014, 4:48 PM

    Or just move to linux.

    57
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    Mute Glen
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    Apr 28th 2014, 5:21 PM

    Frank
    Out of curiosity, and I’m not being a smartass but do you cover your webcam with tape.

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    Mute Jarlath Murphy
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    Apr 28th 2014, 5:25 PM

    Doesn’t everyone?

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    Mute ged_star
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    Apr 28th 2014, 5:34 PM

    Frank where exactly did you get this info

    “NSA hackable and imposing systems with built in cameras and back door snooping technology”

    Never heard such rubbish in the last 15 years that I’ve been working in IT

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    Mute Glen
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    Apr 28th 2014, 5:50 PM

    ged
    I have been in IT less time than you and I can say without reservation that Franks comment has merit.

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    Mute Vocal Outrage
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    Apr 28th 2014, 6:08 PM

    Are you guys off your rockers? XP has probably been compromised in terms of privacy just as much as every other OS

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    Mute ged_star
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    Apr 28th 2014, 6:35 PM

    Glen and Frank

    Where is your proof???

    I would be really interested in reading more info about “NSA hackable and imposing systems with built in cameras and back door snooping technology”

    So please post any proof that you both have and I will gladly read

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    Mute Frank
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    Apr 28th 2014, 7:26 PM

    Glen … I don’t need to … Dell 6400 was made long before build in web cams.

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    Mute Tony Canning
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    Apr 28th 2014, 7:33 PM

    ged_star – what isolated corner of the web have you been living in? Habbo Hotel??

    https://www.eff.org/nsa-spying/timeline

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    Mute Frank
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    Apr 28th 2014, 7:33 PM

    ged_star … I guess you must be still working on Windows 98 with MMX technology hardware.

    Dell have been operating outsourced (India) customer service using remote access to PC Systems for the last 15 years.

    This is quite old news….

    Broadcom has just rolled out a chip for smart phones that promises to indicate location ultra-precisely, possibly within a few centimeters, vertically and horizontally, indoors and out.

    The unprecedented accuracy of the Broadcom 4752 chip results from the sheer breadth of sensors from which it can process information. It can receive signals from global navigation satellites, cell-phone towers, and Wi-Fi hot spots, and also input from gyroscopes, accelerometers, step counters

    http://www.broadcom.com/products/GPS/GPS-Silicon-Solutions/BCM4752

    http://www.nowtheendbegins.com/blog/wp-content/uploads/broadcom-4752-rfid-microchip.jpg

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    Mute Glen
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    Apr 28th 2014, 5:16 PM

    The cost of upgrading to a different OS for businesses alone would be astronomical on the wide scale. People like XP their comfortable with it I can’t see that changing anytime soon.

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    Mute Graeme O'Connor
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    Apr 28th 2014, 6:33 PM

    They did on a mass scale when moving from Windows 95 to XP and there was no complaints about the cost then. If they’re that worried about the cost then they should move to a Unix based OS which can be used for free.

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    Mute Alan Lawlor
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    Apr 28th 2014, 9:25 PM

    Win95 to XP was an improvement.
    Vista and Win8 are arguably not (Win 7 was/is good imho)
    Not everybody is tech-savvy enough to replace Windows with Linux, but that is not necessary.
    For some years, many people on XP have been switching for IE browser to Chrome or Firefox, hence IEs dwindling market share, even amongst non-mobile and non-tablet platforms. This is because there were no longer IE upgrades for xp users, therefore no support for HTML5 and CSS3 increasingly used on many websites.
    So, quick fix is to change broswer not whole OS. You also have less vulnerabilities and quicker patches when they do arise.

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    Mute Glen
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    Apr 28th 2014, 11:40 PM

    Alan
    Vista is a hybrid of XP & 7
    7 is a great OS as is XP but 8 is more touchscreen based. Linux has merit. Their disc defrag is the biggest difference as far as I can see. Personally I use Mozilla for browsing I just can’t see eye to eye with Chrome.

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    Mute Mary Kavanagh
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    Apr 28th 2014, 5:46 PM

    Use Mozilla – unless you bank with BOI.

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    Mute Alan Lawlor
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    Apr 28th 2014, 9:17 PM

    internet explorer IS mozilla

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    Mute Mary Kavanagh
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    Apr 28th 2014, 9:20 PM

    Firefox then!

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    Mute Barry O'Brien
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    Apr 28th 2014, 9:47 PM

    No it’s not, Alan. Firefox is part of the Mozilla Foundation. IE is Microsoft. You may think this because it has the word Mozilla in its User Agent string, but nearly all browsers have that for legacy compatibility reasons.

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    Mute Clau Mc C
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    Apr 28th 2014, 6:11 PM

    IE is widely used in enterprise, chrome and Firefox are more for the end/home user

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    Mute David Jordan
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    Apr 28th 2014, 8:36 PM

    The only country that has to use IE is South Korea, the government there made it a legal requirement to encrypt shopping and banking websites. However, the security software legally required uses Microsoft’s ActiveX scripting language, which is only available in Internet Explorer. Ironically, ActiveX is horribly insecure.

    “South Koreans use Internet Explorer: It’s the law”

    http://www.zdnet.com/south-koreans-use-internet-explorer-its-the-law-7000022827/

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    Mute Thors Big Hammer
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    Apr 28th 2014, 4:47 PM

    Just visit trust worthy sites and you will be fine.

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    Mute Neal Ireland
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    Apr 28th 2014, 5:44 PM

    Which ones are those?

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    Mute Onlyblowingsmoke
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    Apr 28th 2014, 5:40 PM

    What few of you seem to realise or know is that nearly all atm machines in Ireland still use this now security flaud software. Can any one provide information on this, are the banks likely to upgrade, at what cost to the already overcharged customers

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    Mute John McDonnell
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    Apr 28th 2014, 6:27 PM

    Most ATM’s don’t use Internet Explorer.

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    Mute Crocodylus Pontifex
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    Apr 28th 2014, 7:17 PM

    The ‘m’ stands for machine so it’s either AT machine or just ATM but never ATM machine

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    Mute Shay
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    Apr 28th 2014, 5:38 PM

    People still use laptops?

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