The Irish Pension System Was Built for Men
I sat my retirement planning exam recently. One of the questions was a big one, the kind you actually have to think about. “What needs to be fixed in the Irish pension system?” I could have written about tax relief rates, auto-enrolment, the standard fund threshold. I did not pick any of them. I wrote about women.
Ireland has one of the worst gender pension gaps in Europe, around 35%. The average woman retires with far less pension wealth than the average man. Most people hear that and assume it is a pay gap problem. Earn less, contribute less, end up with less. That is part of it, but it is not the main story. The main story is time. Time spent out of the workforce to raise children. Time on reduced hours. Time taken to look after ageing parents. Every one of those years is a year of lost contributions, lost compounding, a year the maths never gets back. The Irish pension system was designed for someone whose career runs in a straight line from 22 to 65. That is not most women.
So what does Ireland actually need to fix? Here is what I wrote.
One. Remove the funding limits for women catching up after caring years. Right now there is a cap on how much you can contribute each year, based on age and earnings. A woman coming back after a five-year career break should not be limited to the same percentage as a man who never stepped away. Let her catch up.
Two. Stop inheritance-tax thresholds from punishing pension gifts. If a parent or family member gifts money into a woman’s pension to help her close the gap, that gift currently eats into her Capital Acquisitions Tax threshold. The family helps her catch up, and Revenue quietly takes it out of her future inheritance allowance. Pension gifts should sit outside CAT entirely.
Three. Let couples share the earnings allowance. Tax relief on pension contributions is capped at €115,000 of earnings per person. So if one spouse earns €230,000 and the other is out of the workforce caring for children, half the household’s pension allowance effectively goes unused. One household, one future. The allowance should transfer.
Four. Teach young women this before they need it. Most of the women I coach are figuring this out in their 40s. Some in their 50s. At that point you can fix the funds. You cannot get the time back. If a 25-year-old woman knew what her 50-year-old self was going to wish she had done, half the gap would close on its own.
I want to be clear. This is not a problem because women do not understand money. They do. It is a problem because the system was built around a career shape that does not match the life most women actually live.
So here is what I would ask you to do. If you are a woman in your 20s or 30s, you have the most valuable thing in finance on your side: time. Use it. Open the pension. Max what you can. Pick the right fund. If you are in a couple, sit down together and look at both pensions side by side, not just his, hers too. If you are an employer, fund a real pension session for the women on your team. And if you have a daughter, sister or niece, send this to her. This is fixable. But not by itself.
If you would like help, here is a short video on what I actually do: https://go.bamillionaire.com/watch-now. Or if you are ready, book a call: https://go.bamillionaire.com/apply
Want this in your inbox every Saturday, before it reaches the blog? Subscribe here: https://bamillionaire.kit.com/newsletter
