Are you born on and after 1962? Do you know how the pension system works? - Gemma

The likelihood is that you do not know how the pension systems works in your regard. In May this year ĠEMMA carried out a survey amongst persons born on and after 1962 to understand their knowledge of how the pension system works, and hence their ability to make informed decisions with regard to their retirement planning.

The general picture is that most people have only a vague idea of how the pension system works and how it directly affects them. You probably are one of them.

This means that there is a high number of persons who plan their retirement on limited, if not the wrong knowledge. Basing such an important decision of how you will finance your desired quality of life in retirement on the wrong knowledge, or information, may have dire consequences on your quality of life when you come to retire. This is particularily so, if your retirement pension is the sole or main source of income during your retirement. These are some of the findings that emerged from the research ĠEMMA carried out – of the respondents:

28% indicated to be knowledgeable of the social security contribution that they pay.
4% of those born in 1969 and after stated that they must be in possession of a 41 year paid contribution history to qualify for a full pension, this being the correct reply.
4% identified the correct Maximum Pensionable Income ceiling on which their pension income is calculated.
1% identified what options are open to them if they have gaps in their paid contributory history.
2% gave a correct reply to their understanding of what constitutes a ‘credit’ to their contributory history.
2% responded correctly with regard to the credit entitlement they may be eligible to with regard to child rearing.
Only 3% showed that they know what protection the social security pension system will provide in the event of the death of their spouse.
When given a hypothetical scenario of the average basic salary and what their pension income will be only 2% provided a correct response, and a further 21% presented a vague idea of what the pension entitlement would be, having indicated that it would be 2/3 of an amount (though they got the amount / maximum capping wrong).