Many UK savers ‘driving without a roadmap’ for pension planning has been saved
Many UK savers ‘driving without a roadmap’ for pension planning
6 December 2014
Some savers are at risk of retirement poverty, according to new research from Deloitte showing those in most need of free pension advice are not going to take it.
Deloitte analysed data from the YouGov Pensions and Annuities Report, a survey of 3,314 savers over 50 and still in work. It found that two-thirds on the average household income will pass up free, impartial advice from pension providers when it starts in April. The figure increases to 69% for people in households earning between £5,000 - £9,999. This comes despite three-quarters of all savers saying they need advice on how and when to draw from a pension, and 58% of people not checking in the last year what their pension income could be.
Andrew Power, financial services partner at Deloitte, said: “Customer engagement here is going to be important. It is disheartening to see that those on low incomes are struggling to navigate pension planning. Clearly, information and advice are critical, but it must be engaging enough to overcome a widespread lack of interest in pensions.”
Deloitte’s analysis indicated that while high earners want the ability to vary their pension income more than others, for the average saver, not running out of money is key. Forty-one percent of those on £100k - £150k would like to be able to vary their pension income, compared with 27% across all income brackets. This contrasts with savers on average household income, whose main priorities are to have a guaranteed pension income and to feel their pension is secure. Their uncertainty over how to manage pensions makes them less interested in product features than higher earners. The results also show a gender divide, with almost half of men (46%) wanting access to lump sums, compared to 38% of women. This could suggest women are more risk averse than men when it comes to drawing their pension.
Regional figures show that 56% of London savers want pensions that minimise tax, in contrast to 49% of all UK savers. This is unsurprising given the concentration of wealth and high house prices in London, which increase inheritance tax liabilities. However, surprisingly, Northern Ireland is by far the keenest for tax efficient pensions, with 66% of savers there wanting this feature.
Power said: “The pension industry needs to consider how to meet savers’ needs. While there is quite a lot of uniformity in what savers say they want, a single solution would fail to take into account some clear differences between savers. At the top-end, solutions should be tailored to financial objectives; but, for the majority, hand-holding is more important.”
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