Five years on from the introduction of Pension Freedoms, new research by The People’s Pension and State Street Global Advisors has shown that mature savers are sleepwalking into retirement. They risk running out of Defined Contribution pension savings and, with a third of their retirement still to come, could spend their later years reliant on the state pension.
In-depth research by consultancy Ignition House explores both retirement planning and spending habits following the introduction of freedoms in 2015. The study reveals that people nearing retirement want their pension provider to supply a safe, guided path into retirement – rather than the complex decisions with which they’re now faced.
The new research centres around interviews with 50 savers and shows how policymakers, and the industry as a whole, have built a system that relies on unrealistic assumptions around how people behave to work effectively.
Key findings include:
- Savers are scared of planning for the future as they don’t want to discover the ‘truth’
- Savers also underestimate the financial risk of growing old and don’t understand how inflation can impact their savings
- The typical saver follows the path of the least resistance – they won’t leave a product or change a drawdown withdrawal rate once they have signed up