The latest Bank of Ireland/ESRI Savings and Investment Index was released today. The Index tracks household attitudes towards savings and investment as well as monitoring perspectives on the current and future savings and investment environment.
Irish confidence levels around retirement waned in November as the Retirement Optimism Index fell from 105 in September to 99 in November. The key factor driving the index lower was a big drop in perceptions about how financially prepared people felt for retirement.
Almost one in two people (49%) said they felt financially unprepared for retirement, the highest reading since the question was first asked in September 2017.
Although stock markets were again volatile in November, they at least eked out a gain of 1.5% and helped to stem recent losses for Irish investors. Thirty two percent of people felt it was a good time to invest in November, down slightly from the 33% reading in October. However, the numbers that felt it was a bad time to invest dropped from 26% back to 22%.
Attitudes towards investment were unchanged in November. The percentage of regular investors surprisingly rose to a nine month high of 34% in the month given the continued market volatility. The tax deadline for income tax relief on pension investments could have boosted peoples’ eagerness to invest. However, this improvement was offset by less confidence around the amounts people were investing each month, causing the overall Investment Attitudes sub index to be unchanged at 102.
Over the past year, weaker attitudes toward saving have softened saving sentiment. At an economy wide level this isn’t translating into weaker savings volumes though – amounts on deposit held by Irish households rose by €2.5 Billion in the year to the end of September bringing the total to €103 Billion.
However, looking at regional and demographic patterns it is noticeable that saving attitudes have deteriorated for certain groups; younger savers, those in professional occupations and those in Dublin. So it is possible that some groups that are benefiting most from the economic recovery are reassessing their broader financial plans.
The Savings Environment sub index climbed from 98 to 101 in November as the percentage of people that felt it was a good time to save rose to 43%, the highest since January. A significant divergence of opinion on the environment for saving remains between younger and older savers though. Older savers remain more downbeat about the savings environment with continued low returns the likely cause.
Commenting on the research, Tom McCabe from Bank of Ireland Investment Markets said, "The Savings and Investment Index stabilised in November thanks to a reasonable pick up in investment sentiment following October’s battering. A better stock market performance clearly helped and it was also heartening to see investment attitudes remaining resilient in the face of continued market volatility. In the short term, market conditions and the geopolitical outlook are very likely to remain the key factors shaping Irish investor sentiment."
He added, "The drop in confidence around retirement provision is significant and just half of respondents feel financially prepared for retirement. With people living longer adequate pension provision is more challenging than ever, and some concern clearly emerged in November."
Source: www.businessworld.ie
