Irish Financial Review

Financial stress is a work killer

When it comes to personal finance, there are three main drivers that undermine them:

  1. Illness
  2. Loss of income (unemployment, wage cuts) and
  3. Family breakdown

Financial stress causes a loss of work participation and increases the risk of serious illness

It’s no secret that worrying makes it a lot harder to concentrate. How many times have we all ‘zoned out’ and not heard a single word that someone standing right next to us may have said when our minds were somewhere else.

Work is no exception. Worry causes a loss of concentration.


The impact financial worry has on work is estimated to cost employers 12.4 days in lost productivity each year according to WTW, a U.S. benefits firm. It’s called ‘presenteeism’, a ghost-like situation where employees are physically at their work desks but their minds are elsewhere.

Physical ailments mount

Loss of concentration is just one manifestation of financial worries. However, there are far greater health concerns for those that worry excessively about their finances.

Migraines, ulcers and depression

44 percent of people that reported high financial stress also reported having migraines compared to just 4 percent with low financial stress according to research conducted by AOL.

27 percent of those with high financial stress suffered from ulcers and digestive tract problems compared to just 8 percent of those that did not worry about finances.

23 percent with financial worries were diagnosed as depressed compared to 4 percent that did not report financial worries.

Employees with a major depressive episode will lose 15 percent to 20 percent of their productivity in a given year.

Ireland still in a personal finance quagmire

Despite the current economic recovery taking place in Ireland, the level of personal financial distress is acute. For example, over 60,000 mortgage holders have arrears of 90 days or more where borrowers are bound by a series of strict spending controls under various arrears guidelines. Additionally, borrowers in arrears are subject to higher rates of contact from their lenders. But it is not just mortgages. Tens of thousands of credit union borrowers in arrears are subject to regular contact by credit unions and collections agencies seeking debt repayments.

Benefits of financial awareness campaigns

Financial literacy campaigns that provide clarity to employees on a range of financial topics help reduce stress. This is achieved by providing budgeting structure, tips on money management and ways to increase income and reduce costs.

Global brands lead the way

Global brands operating in Ireland are now leading the way on employee benefits through innovative Employee Benefit Programmes (EAP). Such programmes include topics ranging from stress control, diet and weight management. But the most popular topics among employees is money management where employees are provided workshops that advise on financial negotiation, spending control, tips on reducing costs along with all-day financial stress management. The workshops, in conjunction with MoneyWhizz are available nationwide.

3-point plan for increasing pension uptake

By Frank Conway

When Leo Varadkar, the Minister for Social Protection claimed that the State Pension was unsustainable, he wasn’t being a sensationalist, he was being a realist.

Leo Varadkar has warned that the State pension is ‘unsustainable’.

The State pension is unsustainable in its current form.

But then again, the State pension has probably been unsustainable for some time which is why the rules around qualifying for the maximum benefit have changed a lot in recent years. The earned credit threshold means that we must all work a lot longer before we are entitled to the full amount, which works out at about €12,000 annually.

So, what does Minister Varadkar say? Well, noting that new really!

But that’s not really the problem. It’s a well worn path of the pensions industry to cry about the low levels of pension participation. Why wouldn’t they, they have a real vested interest in increasing the money under management in pension plans. More money in occupational pension plans, in DB and DC schemes, in PRSA’s, in AVC’s, in SSAP’s, in BOBS, in ARFs and in AMRFs the more money the industry stands to make from fees and charges.

The real problem is not the lack of participation by half of the population. The real problem is the pensions industry itself. Broadly, it has failed them! It has failed them through high fees, through low returns and through complex language that make the entire pensions experience about as much fun as navigating the Wild Atlantic Way in a pair of oversized clown shoes.

That is the real problem!

A majority of people that I talk to are aware of their financial needs in retirement. Some have made private provision, many have not.

None exhibit a devil-may-care attitude to their long term financial security. Quite the opposite!

Many are struggling families that work hard, are taxed high and pay extraordinary sums of money for childcare, transport, health and life insurance and mortgages and rent.

All too often, there is very little money left over when all of the bills are paid.

Where State can make a difference

As the State authorities set about to ‘review’ how to tackle the lack of private pension participation and even develop some recommendations to increase them, they need to think carefully and be smart.

Minister Varadker could choose to box clever and put the cat among the pensions pigeons by:

  1. Tackling high fees.
  2. Simplifying pension language.
  3. Developing a comprehensive financial education framework.

For starters, the State authorities must tackle the culture of high administration fees that drain enormous sums of money from working families. These are fees that end up in the coffers of over-paid ‘advisers’ and overseas fund managers.

Using an actuarial calculator developed by Eugene Daly of, someone earning €50,000 a year and putting away 10% of their earnings into a pension (50% company match, factoring for economic and wage inflation between aged 30 – 65, 6% average annual growth), between €250,000 and €300,000 is siphoned off in high fees (that number is the difference between a 1.5% OCF and a 3.5% OCF). This is money that could have been held onto by individual savers and ultimately put to use in local communities up and down the country instead of being re-directed to overpaid fund managers in London and New York!

Were the State authorities to challenge this high-fee culture, it would make an enormous difference to the financial well being of millions of citizens. In fact, it is perhaps an area the state itself could take a central role in, bypassing the expensive private market route favoured by vested interests.

But the State shouldn’t stop there. Tackling fees would be central to the long term success of encouraging higher levels of participation but the state would also need to create greater appeal to the masses.

This could be done through financial education.

For starters, there should be a ban on the overuse of acronyms in the pensions space, there are too many. In fact, there are so many acronyms, even professionals working in the pension industry struggle to list them and explain them to prospective customers. Usually, customers just end up nodding their heads in faked agreement. This is no way to build trust. It’s little wonder so few people get involved in a pensions discussion in the first place.

Additionally, there needs to be a comprehensive programme of financial education launched that simplifies the whole area of money. It really isn’t that complicated. Most people have a fairly good intuition about money but many find the language of money off-putting. And any comprehensive programme of financial education must begin at primary school using simple concepts and analogies to explain some basic money principles. Such a strategy should be built on the pillars of financial knowledge which have been developed in the Irish market by MoneyWhizz. And, this financial education programme should be segmented and evolutionary to include content that increases in complexity and education to benefit children as they grow. And, the education process should not stop there. It must continue right throughout adult life.

Financial education required to boost pension participation

To stave off pensions ‘time-bomb’, more education needed to highlight benefits

By Frank Conway



Protecting and growing personal wealth

Financial education needed to highlight benefits of long-term pension contributions

A report from the Central Statistics Office today shows that the number of workers who had a pension in the fourth quarter of last year fell to 46.7% compared to 51.2% in the fourth quarter of 2009.

Considering that Ireland has experienced the most crushing debt laden economic meltdown in living memory, the numbers could have been far worse. But that is not to take away from the very serious issue of so few having no pension provision at all other than the state pension.

Today’s numbers are the first study since 2009 and form part of the CSO’s latest quarterly Household National Survey.

To put things into perspective, 42% of workers said they expected an occupational or personal pension would be their main source of income when they retired.

However, the proportion of workers who expected the state pension to be their main source of income rose from 26% in 2009 to 36% in the fourth quarter of last year – highlighting the deepening pension crisis facing the country. It also reinforces the extremely difficult period the vast majority of families across Ireland have had to endure since the last study in 2009. And it is not just the broad economic conditions. Growing taxes and charges, including the USC, rising college and secondary school costs, rising insurance costs just to name a few are limiting the financial capacity of families to find the additional funds to pay into private pensions.

More men than women had pension cover – with the level of coverage for male workers coming in at 47.2% and for female workers at 46.2%.

They also reveal that pension coverage was lowest amongst the youngest workers. Just 14.1% of workers aged between 20 and 24 had a pension in the fourth quarter of last year, while 36% of workers aged between 25 and 34 had a pension.

The CSO said that pension coverage was highest among workers aged between 35 and 44 years of age, standing at 55.3%.

Across Ireland, what is needed is a broad, sustained awareness campaign that highlights the benefits of pension contribution and participation. There must also be greater focus on financial education, with a particular emphasis on money management. And, there must also be a focus on management fees that are applied to pensions as these can significantly reduce the overall value of any investment.

When people are shown the enormous financial benefits of a long-term savings culture for themselves personally through a pension structure, where they can make a direct connection of their monthly contributions, tax relief, company matching and long-term money growth, there is a much greater buy-in. But if there is little or no education or continuous communication, then most people will view pensions as a bit of a black hole. And without clarity and goal-setting, pensions will remain a mystery to many people where most will continue to opt out.


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