But new research knocks this idea on its head by concluding that we are a lot better off than we realise. It found that 60% of those without a pension could actually afford one, especially if they diverted the money that had been going into SSIAs over the last five years as these accounts start to mature.

The cash we need to save for the future can be found in some unexpected places according to Brian Sullivan, head of pension sales at Bank of Ireland Life, which commissioned the research. "If you treat yourself to a cappuccino and a danish every morning, that's costing you about 5 a day or 100 over the course of a month, " he says. "For the same money, you could put about 200 a month to a pension because of the tax relief that can be claimed for pension contributions."

Once you scratch the surface, the scope for bigger pension contributions becomes apparent. For example, only 6% of the people surveyed by Bank of Ireland believe they could afford to put away as much as 300. . . 500 per month. But Sullivan believes they are overlooking the cash that will be freed up as the SSIA scheme winds down.

"We believe that a greater majority of people will be able to make monthly payments of 300. . . 500 into their pension once the SSIA scheme finishes, " he says. "After all, many people don't realise that a monthly contribution of 488 by a working person on the higher rate of tax would only cost 254, the maximum SSIA payment."

Like all pension professionals, his advice is to start saving early rather than waiting until your finances are strong enough to allow you throw some serious cash into your pension. "Most people in the 25. . .35 age bracket already have big challenges with their first mortgages and the costs of childcare, " says Sullivan.

"But pension saving is still possible by starting small and reviewing your contributions regularly. By starting early you learn the discipline of regular saving and you will also benefit from the impact of compounded returns, which can have a huge impact on the value of your pension over the long term."

For example, if you start saving 200 a month into a pension at age 35, Bank of Ireland projects that you could end up with a pension nest egg of about 220,000 when you retire in 30 years time. But if you had started at age 30, the projected value of the pension would be almost 312,000. In other words, the delay of five years could knock up to one-third off the value of your pension.

Part of the gap is due to the fact that, the longer you save, the more money you will have contributed to your pension. But a big part is caused by compounding, so that you are earning money on returns earned in the past as well as on your regular contributions.

Despite the benefits of starting early, most of us are slow off the mark to start.

According to separate research conducted earlier this year by Ark Life, the pensions arm of AIB, most people in the 40. . .60 age bracket see themselves as financially cautious. Eight out of ten profess to saving for a rainy day while a similar number claim to plan and budget for big purchases.

Nevertheless, 60% regret that they did not start saving earlier in life, leading Ark Life to conclude that "their conservative outlook is based more on how they wish to see themselves rather than on their true position".

Having put retirement planning on the long finger, it is no surprise that less than half of the middle-aged people questioned in the survey believe their pension arrangements are adequate.

Sullivan says we have an immature approach to finance. "We insure our cars in case we have an accident.

We insure our homes in case they burn down. But we drag our heels when it comes to protecting our incomes, even though they are guaranteed to stop when we retire."

THE ITALIAN JOB: LEADING BY EXAMPLE Restaurateur Lamara Hebib is making the most of the tax breaks available for pension investing, putting 25% of his earnings into two separate plans.

The owner of Lali's Italian restaurant in Portmarnock, Co Dublin, Lamara has accumulated a sizeable pension fund, even though he has no plans for an early retirement.

"I'm not quite 51 yet and I intend to keep working for as long as my legs will carry me, " he says. "I'm not the type of person who can sit around doing nothing."

Lamara says he has no hesitation about locking away so much money in a pension, even though he will not be able to touch it until age 60 at the earliest.

"You have to plan ahead and think about tomorrow, " he says. "Hopefully I'll still be around to collect the goods when the time comes. I've no mortgage, I don't have to make payments to anyone, so I don't have other demands on my "nances."

Under existing rules people in their 50s can contribute 30% of their earnings to a pension and claim full tax relief. This rises to 35% of earnings from age 55 and 40% from age 60. Lamara hopes to increase his contributions shortly to take full advantage of these limits. "I'm contributing 25% and for now I'm keeping the extra 5% to travel around, " he says.

Lamara started pension saving with Irish Life in the early 1990s and, while he continues to pay into this plan, the bulk of the money now goes to Bank of Ireland. "When I looked at my pension position in 2000, Bank of Ireland seemed to be doing a good job so I decided to go with them, " he says.

While performance has sometimes been patchy, he is philosophical about the vagaries of the investment markets. "Whenever something happens in this world, we have to pay the price, " he says.