As pension reforms pass through Parliament, Which? reveals how people are currently feeling about their retirement income and calls for urgent action from Government to protect people’s money.
Following years of poor value annuities and high charges, new research from Which? finds that there is still uncertainty and low confidence in the pensions industry. Just 19% trust long-term financial products like pensions or investments and three in five (57%) are worried about the value of their pension.
Only one in three (28%) of those approaching retirement (aged 50-64) are confident they’ll have enough to live on in retirement, falling to just a quarter (23%) of those aged 30-49.
Six in ten (60%) who aren’t yet retired don’t know how much to save for a comfortable retirement and half (51%) don’t know how much they will need to live on each week.
In the past too many consumers have been left with a raw deal as a result of the broken annuity market. Ahead of the new reforms coming into effect next April, the Government must take urgent action to ensure this market offers value for money.
Which? is today giving evidence to the Public Bill Committee on the Pension Schemes Bill and will be calling for:
· All pension schemes to be high quality and subject to strong governance.
· The Government to set out how the different schemes will be explained to consumers so that they can understand the varying risks.
· Guidance that covers all of the available options, and directs people to further support or regulated advice as appropriate.
· The Government to keep the guidance service under regular review and take immediate action if it is not up to scratch.
We know many people have savings beyond their pension so we also want there to be an easy way for people to see all their retirement income, savings and investments in one place, and for the guidance session to take all into account. One in four (21%) say they plan to use a cash ISA to help fund their retirement, 17% have other savings and one in ten (12%) say they’ll use the property they live in.
Which? executive director, Richard Lloyd, said:
“The Government’s pension reforms are the biggest opportunity for years to make this market work in the best interests of consumers. With many people uncertain they’ll have enough to live comfortably in retirement, now is the time to introduce a consumer-friendly system with good quality guidance that helps people make the most of their hard-earned money.
“With only six months until the reforms come into effect, the Government, industry and regulators must all work together to ensure people get a good deal throughout their retirement.”
Notes to editors:
1. Methodology: Populus, on behalf of Which?, interviewed a representative sample of 2,251 UK adults online between 17th and 18th September 2014. Data were weighted to be demographically representative of all UK adults. Populus is a member of the British Polling Council and abides by its rules.
2. Which? has produced a free guide to help people understand how much they need to save into a pension: http://www.which.co.uk/money/retirement/guides/how-much-do-i-need-to-save-in-my-pension/