The People’s Pension comments on Government response to the Work and Pensions Select Committee Report on Pension Freedoms
Commenting on the government’s response to the Work and Pension Select Committee’s Pension Freedoms report, Dave Brown, director of strategy and innovation at The People’s Pension, said:
“While we recognise the diverse needs of people when they reach retirement and back proposals to better help people towards information and guidance, we must accept that there will still be a large number of retirees who aren’t engaged. For these people, there is a clear need for a guided pathway in retirement, and we, like many master trusts, are currently working on the details of product design to help our members live comfortably once they retire.”
As the 3rd report in the ‘New Choices, Big Decisions’ series, this study looks at a group of savers who accessed or considered accessing their pension savings in late 2015 and early 2016, following up a year later to see how their circumstances and perspectives have changed.
We contacted participants from the initial ‘New Choices, Big Decisions’ study to explore how their lives have changed over the past 12 months and to understand, with the benefit of hindsight, how they now feel about the choices they’ve made.
The research found that savers who accessed cash from their pension funds using the new pension freedoms don’t regret their decisions, believing the happiness generated from spending the money – on holidays, cars, home improvements and family – far outweighs any benefit from receiving it as a ‘paltry’ income in the future.
It also shows that even where savers are engaged with their pension, decision making can be challenging. Multiple sources of information on what to do can add confusion rather than making the picture clearer – and can lead to some savers just deciding to take action without necessarily thinking about the long term.
Download our ‘One year on: part 3 of New Choices, Big Decisions’ report
Following on from our study of decision making at retirement, this report, created with State Street Global Advisors, further analyses the findings of the initial research, looking specifically at how your personality could affect your income in retirement.
It identifies 7 distinct personality types among people who are accessing their pension pots under the new freedoms, and finds they are at unacceptably high risk of poor long-term outcomes.
The report calls for the industry to consider how best to support these types of pension savers in their decision making – to try to avoid people running out of money in retirement.
The idea is that, by understanding the lens through which retirement savers see the world, their goals and pain points, we can start to move away from a one-size-ﬁts-all approach to truly creating personalised solutions. This would to help people make the most of their money under the new pension freedoms.
Download our ‘Part 2 of New Choices, Big Decisions’ report
Following the introduction of the new pension freedoms, we wanted to explore how people make their retirement decisions.
Alongside State Street Global Advisors and Ignition House we undertook research which tracked each step of the decision-making process across a 6-month period. The research looked at:
- how people made their retirement decisions
- the emotions they experienced
- the barriers they had to overcome.
The research shows that savers thought the new pension freedoms meant they had to take their cash now – but it might not be the right choice for them.
It indicates that freedom and choice is welcomed but overwhelming for savers, and it reveals the challenges that need addressing, highlighting 10 key questions that savers should ask themselves to help them make the most of their retirement savings.
Download our ‘Part 1 of New Choices, Big Decisions’ report.