In the latest edition of Construction Magazine, Susan O’Mara, CPAS Business Development Manager and Milestone Advisory Director, highlights the urgent need to improve pension outcomes for women. A quick online search makes it clear that change is necessary, and raising awareness among both women and their employers will be a key driver in bridging the gap.

Pensions are a crucial part of financial security, especially for women, who tend to live longer and may take career breaks for caregiving. In Ireland, the life expectancy for women is 3.6 years longer than men, which means their pension must last longer.

What you should know (and what you can ensure others know)

Types of pensions in Ireland

State pensions

There are two types of state pensions in Ireland: the contributory and non-contributory. The contributory state pension is based on PRSI contributions.

To qualify, you must have started paying PRSI contributions at least 10 years before you draw down your pension and have enough PRSI contributions. You can find out if you have or will have enough contributions by requesting a copy of your contribution statement using MyWelfare.ie.

There are contribution credits available for those who have gaps in their PRSI records for time spent caring.

The non-contributory pension is means-tested and is a payment for those who do not qualify for the contributory state pension. The full state pension currently provides €289.30 per week (€15,043.60 per annum), which while certainly valuable, is a modest income not intended to provide more than a basic lifestyle.

Occupational pensions

Many employers offer pension schemes, where both you and your employer contribute. These are highly recommended as they provide extra income on top of the state pension.

Other types of pensions include personal retirement savings accounts and personal pensions, which are typically used by individuals who want to save for retirement but do not have access to a workplace occupational pension.

Pension tax benefits

  • You get tax relief on pension contributions – this means you pay less tax while saving for retirement.
  • Pension funds grow tax-free until retirement.
  • You can access a portion of your pension fund tax-free at retirement.

The value of compound interest – the eighth wonder of the world

Put simply, a pension is a long-term savings account with tax benefits. Once you get to retirement, you can then draw on those savings to replace your income.

Compound interest is valuable as it allows money to grow exponentially over time. Unlike simple interest, which only earns interest on the initial principal, compound interest earns interest on both the principal and previously accumulated interest.

This leads to accelerated growth, making it a powerful tool for saving and investing. The longer the money stays invested, the greater the impact due to the ‘compounding effect.’

Serious considerations for women

While much of this is applicable to everyone, women must consider the following:

  • Longer life expectancy: Women live longer, so they need more retirement savings.
  • Career breaks: Women are more likely to take time off for caregiving, leading to gaps in pension contributions.
  • Gender pension gap: Women typically retire with less than men due to lower earnings and fewer contributions.

What are the solutions?

Knowing about the issues facing women when it comes to income in retirement is an important first step.

Along with salary disparity, Irish Life research found that another key issue is a Eurostat finding that women in Ireland take an average of six years out of the workforce, primarily for maternity leave and care responsibilities. Unpaid leave directly affects the ability to make pension contributions.

Further actions that can help bridge the gap

Encouraging employers to introduce a pension-specific workplace policy, adding an additional employer contribution for a period of time for women returning from maternity leave.

AVCs – additional voluntary contributions are a key consideration for women. Contributing more after a period of leave can recover lost ground and increase potential outcomes in retirement.

Auto-Enrolment (AE) is due to start in September 2025. While AE is not the only solution, it will ensure that women not previously included in their employers’ occupational pension scheme, will either be included in their employer’s scheme or automatically enrolled into the AE scheme My Future Fund. This does not address the career interruptions, particularly as My Future Fund will not facilitate AVCs. If you have the choice to join a pension scheme or be auto-enrolled, you will have greater flexibility in an occupational pension scheme.

Education and awareness

Both women and their employers should be aware of the challenges facing women when it comes to saving for retirement.

Financial health is an essential part of overall well-being. Talk to a pension professional for the construction sector. CPAS can help anyone in the sector in any type of role plan for their future.

Contact Susan O’Mara, CPAS Business Development Manager by email susan@cpas.ie or by direct dial 01 2234942.