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Savings & Retirement Planning - Ireland - November 2017

“With precautionary saving being the leading motivation behind both NI and RoI consumers' saving activity, it is evident that Irish consumers are conscious of the need to prepare for the future. Despite this, there is a clear deficit between awareness of the need to prepare and actual preparation when it comes to retirement planning. There is an ongoing challenge facing the industry to continually promote and educate."

- Brian O’Connor, Senior Consumer Analyst

This report will look at the following areas:

  • Economic growth and job creation in NI and RoI
  • 29% of NI and 22% of RoI consumers well placed to save and invest
  • Consumer confidence faring well, but spectre of Brexit having impact
  • Little financial return on saving due to low interest rates

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Table of contents

  1. Overview

    • What you need to know
      • Issues covered in this Report
        • Definitions
        • Executive Summary

            • The market
              • Figure 1: Total deposits from private households, IoI, RoI and NI, 2012-22
            • Forecast
              • Figure 2: Index of total deposits from private households, actual, estimated, forecast and projected, RoI and NI, 2012-22
            • Market factors
              • Economic growth and job creation in NI and RoI
                • 29% of NI and 22% of RoI consumers well placed to save and invest
                  • Consumer confidence faring well, but spectre of Brexit having impact
                    • Little financial return on saving due to low interest rates
                      • Who's innovating?
                        • The consumer
                          • 20% of NI and 17% of RoI consumers have no savings at all
                            • Figure 3: Amount that consumers currently have in savings and investments (excluding the value of your main home and any pension savings), NI and RoI, October 2017
                          • Around two thirds of consumers have a basic savings account
                            • Figure 4: Ownership of savings and investments products, RoI and NI, October 2017
                          • Consumers saving for rainy days, holidays, celebrations and retirement
                            • Figure 5: Main reasons for saving by consumers, NI and RoI, October 2017
                          • Sense that retirement is changing, and preparations not ideal
                            • Figure 6: Agreement with statements relating to savings and retirement, NI and RoI, October 2017
                          • What it means
                          • The Market – What You Need to Know

                            • Economic growth and job creation in NI and RoI
                              • 29% of NI and 22% of RoI consumers well placed to save and invest
                                • Consumer confidence faring well, but spectre of Brexit having impact
                                  • Little financial return on saving due to low interest rates
                                  • Market Size and Forecast

                                      • Irish consumers' savings total almost €143 billion in 2017
                                        • Figure 7: Total deposits from private households, IoI, RoI and NI, 2012-22
                                      • Total value of savings to top €163 billion by 2022
                                        • Figure 8: Index of total deposits from private households, actual, estimated, forecast and projected, RoI and NI, 2012-22
                                    • Market Drivers

                                      • Economic growth continuing in RoI, while unemployment falls
                                        • Figure 9: Key economic indicators, RoI, actual, estimated and forecast, 2016-18
                                        • Figure 10: Labour market summary, RoI, estimated and forecast, 2016-18
                                      • Brexit uncertainties looming, but NI economy still growing
                                        • Figure 11: Economic growth, annual % increase, estimated and forecast, NI and UK, 2017-19
                                        • Figure 12: Unemployment rate, NI, estimated and forecast, 2017 and 2018
                                      • Around a quarter of consumers can afford to easily add to savings
                                        • Figure 13: How consumers rate their own financial health, NI and RoI, November 2017
                                      • Increase over last two years in number of consumers with 'healthy' finances
                                        • Figure 14: Consumers who rate their own financial health as being 'healthy', NI and RoI, November 2015 and November 2017
                                      • Looming Brexit shadow affecting RoI consumer confidence
                                        • Figure 15: Consumer sentiment Index Survey results, RoI, October 2016 and October 2017
                                      • Uncertainty taking its toll on NI consumer confidence
                                        • Savings ratio in NI and RoI lagging international norms
                                          • Figure 16: Personal savings %, EU, eurozone, UK (incl. NI) and RoI, June 2017*
                                        • Low return on savings likely discouraging many would-be savers
                                            • Figure 17: If consumers are considering applying for a mortgage within the next 12 months, NI and RoI, January 2017
                                        • Companies and Brands – What You Need to Know

                                          • Some savers in UK worse off as commercial banks fail to pass on rise in interest rates
                                            • AIB and KBC cut interest rates on several accounts
                                              • Bank of Ireland becomes first Irish institution to charge for placing cash on deposit
                                                • HSBC trails open API app to help consumers manage money
                                                  • Ulster Bank to remove hard credit searches which can damage customer credit rating
                                                  • Who’s Innovating?

                                                    • The Innovative ISA
                                                      • Bitcoin savings accounts
                                                        • BSave
                                                          • Magnr
                                                          • Companies and Brands

                                                              • Allied Irish Bank (RoI) / First Trust Bank (NI)
                                                                • Key facts
                                                                  • Savings products
                                                                    • Recent developments
                                                                      • Bank of Ireland
                                                                        • Key facts
                                                                          • Savings products
                                                                            • Recent developments
                                                                              • Danske Bank
                                                                                • Key facts
                                                                                  • Savings products
                                                                                    • An Post (RoI Only)
                                                                                      • Key facts
                                                                                        • Savings products
                                                                                          • Halifax (NI Only)
                                                                                            • Key facts
                                                                                              • Savings products
                                                                                                • HSBC (NI Only)
                                                                                                  • Key facts
                                                                                                    • Savings products
                                                                                                      • Recent developments
                                                                                                        • KBC (RoI Only)
                                                                                                          • Key facts
                                                                                                            • Savings products
                                                                                                              • Recent developments
                                                                                                                • Nationwide (NI Only)
                                                                                                                  • Key facts
                                                                                                                    • Savings products
                                                                                                                      • Permanent TSB (RoI Only)
                                                                                                                        • Key facts
                                                                                                                          • Savings products
                                                                                                                            • Santander (NI Only)
                                                                                                                              • Key facts
                                                                                                                                • Savings products
                                                                                                                                  • Post Office (NI Only)
                                                                                                                                    • Key facts
                                                                                                                                      • Savings products
                                                                                                                                        • Ulster Bank
                                                                                                                                          • Key facts
                                                                                                                                            • Savings products
                                                                                                                                              • Recent developments
                                                                                                                                              • The Consumer – What You Need to Know

                                                                                                                                                • 20% of NI and 17% of RoI consumers have no savings at all
                                                                                                                                                  • Around two thirds of consumers have a basic savings account
                                                                                                                                                    • Consumers saving for rainy days, holidays, celebrations and retirement
                                                                                                                                                      • Sense that retirement is changing, and preparations not ideal
                                                                                                                                                      • The Consumer – Value of Savings

                                                                                                                                                          • Around a fifth of all Irish consumers have no savings at all
                                                                                                                                                            • Figure 18: Amount that consumers currently have in savings and investments (excluding the value of your main home and any pension savings), NI and RoI, October 2017
                                                                                                                                                          • Women – particularly in NI – more likely to be without savings
                                                                                                                                                            • Figure 19: Consumers who currently have no savings or investments, by gender, NI and RoI, October 2017
                                                                                                                                                          • Only one in 10 over-55s are without savings or investments
                                                                                                                                                            • Figure 20: Consumers who currently have no savings or investments, by age, NI and RoI, October 2017
                                                                                                                                                          • Employment a significant factor in ability to save
                                                                                                                                                            • Figure 21: Consumers who currently have no savings or investments, by work status, NI and RoI, October 2017
                                                                                                                                                          • Social class and household income major factors in saving
                                                                                                                                                            • Figure 22: Consumers who currently have no savings or investments, by social class, NI and RoI, October 2017
                                                                                                                                                            • Figure 23: Consumers who currently have no savings or investments, by gross annual household income, NI and RoI, October 2017
                                                                                                                                                          • Fair increase in number of NI consumers with no savings or investments
                                                                                                                                                            • Figure 24: Consumers who currently have no savings or investments, NI and RoI, 2015 and 2017
                                                                                                                                                          • Increase in number of NI consumers with low-level savings
                                                                                                                                                            • Figure 25: Amount that consumers currently have in savings and investments (excluding the value of your main home and any pension savings), NI, 2015 and 2017
                                                                                                                                                          • RoI consumers' savings holding steady
                                                                                                                                                            • Figure 26: Amount that consumers currently have in savings and investments (excluding the value of your main home and any pension savings), RoI, 2015 and 2017
                                                                                                                                                        • The Consumer – Ownership of Savings and Investment Products

                                                                                                                                                            • Basic savings account most popular product among all consumers
                                                                                                                                                              • Figure 27: Ownership of savings and investments products, RoI and NI, October 2017
                                                                                                                                                            • Savings accounts holding across-the-board appeal for Irish consumers
                                                                                                                                                              • Figure 28: Ownership of savings accounts (excluding post office accounts), by gender, age and social class, RoI and NI, October 2017
                                                                                                                                                            • Company pensions owned by wealthy, older men in employment
                                                                                                                                                              • Figure 29: Ownership of company pension, by gender and age, RoI and NI, October 2017
                                                                                                                                                              • Figure 30: Ownership of company pension, by work status, RoI and NI, October 2017
                                                                                                                                                              • Figure 31: Ownership of company pension, by social class and gross annual household income, RoI and NI, October 2017
                                                                                                                                                            • Self-employed, men, over-55s, high incomes opting for personal pensions
                                                                                                                                                              • Figure 32: Ownership of personal pension, by gender and age, RoI and NI, October 2017
                                                                                                                                                              • Figure 33: Ownership of personal pension, by social class and gross annual household income, RoI and NI, October 2017
                                                                                                                                                              • Figure 34: Ownership of personal pension, by work status, RoI and NI, October 2017
                                                                                                                                                            • Firm preference for cash over stocks and shares when buying an ISA
                                                                                                                                                              • Figure 35: Ownership of ISAs, cash and stocks & shares, by gender, age and social class, NI, October 2017
                                                                                                                                                            • Men, over-55s, self-employed, wealthy putting cash into equities
                                                                                                                                                              • Figure 36: Ownership of individual company shares, by gender and age, RoI and NI, October 2017
                                                                                                                                                              • Figure 37: Ownership of individual company shares, by work status, RoI and NI, October 2017
                                                                                                                                                              • Figure 38: Ownership of individual company shares, by social class and gross annual household income, RoI and NI, October 2017
                                                                                                                                                          • The Consumer – Reasons for Saving

                                                                                                                                                              • Majority of savers are saving out of precaution
                                                                                                                                                                • Figure 39: Main reasons for saving by consumers, NI and RoI, October 2017
                                                                                                                                                              • Appeal of 'rainy day fund' extends across all consumers
                                                                                                                                                                • Self-employed consumers especially inclined towards precautionary saving
                                                                                                                                                                  • Figure 40: Consumers who are saving for a rainy day, by work status, NI and RoI, October 2017
                                                                                                                                                                • Women more likely to be saving to pay for a holiday
                                                                                                                                                                  • Figure 41: Consumers who are saving to pay for a holiday, by gender and age, NI and RoI, October 2017
                                                                                                                                                                • Young C2DEFs and women saving for celebrations and presents
                                                                                                                                                                    • Figure 42: Consumers who are saving to pay for Christmas or birthday presents/celebrations, by gender, age and social class, NI and RoI, October 2017
                                                                                                                                                                  • Self-employed, in particular, saving for retirement
                                                                                                                                                                    • Figure 43: Consumers who are saving to prepare for retirement, by gender, work status and social class, NI and RoI, October 2017
                                                                                                                                                                  • Almost a quarter of consumers saving for a home improvement…
                                                                                                                                                                    • Figure 44: Consumers who are saving to pay for home improvements (eg extension, new kitchen etc), by gender and age, NI and RoI, October 2017
                                                                                                                                                                  • …while many of these same consumers are saving for a large purchase
                                                                                                                                                                    • Figure 45: Consumers who are saving to pay for a large purchase, by gender and age, NI and RoI, October 2017
                                                                                                                                                                  • Saving for education or medical expenses far more common in RoI
                                                                                                                                                                    • Figure 46: Consumers who are saving for medical expenses, educational expenses or qualifications/training, NI and RoI, October 2017
                                                                                                                                                                  • Consumers aged 18-24 with heavy internet use saving to purchase cars
                                                                                                                                                                    • Figure 47: Consumers who are saving for a new car/vehicle, by age and daily internet use, NI and RoI, October 2017
                                                                                                                                                                • The Consumer – Agreement with Statements

                                                                                                                                                                    • Concern and wariness dominate consumers' attitudes towards retirement
                                                                                                                                                                      • Figure 48: Agreement with statements relating to savings and retirement, NI and RoI, October 2017
                                                                                                                                                                    • Sense among consumers that the nature of retirement is changing
                                                                                                                                                                      • Figure 49: Agreement with statements relating to changes in retirement, NI and RoI, October 2017
                                                                                                                                                                    • State pension no longer determines retirement age, but still matters
                                                                                                                                                                      • Figure 50: Agreement with statements relating to state pension and state retirement age, NI and RoI, October 2017
                                                                                                                                                                    • Question marks over consumers' level of preparedness for retirement
                                                                                                                                                                      • Figure 51: Agreement with statements relating to preparedness for retirement, NI and RoI, October 2017
                                                                                                                                                                    • Uncertainty and lack of confidence when it comes to retirement planning
                                                                                                                                                                      • Figure 52: Agreement with statements relating to savings and retirement, NI and RoI, October 2017
                                                                                                                                                                  • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                    • Data sources
                                                                                                                                                                      • Abbreviations

                                                                                                                                                                      Savings & Retirement Planning - Ireland - November 2017

                                                                                                                                                                      US $1,453.83 (Excl.Tax)