Survey reveals that pension savers want trusted guidance to help them secure a good retirement
Three quarters (75 per cent) of UK adults who have a pension say that they would consider taking guidance about how to make their savings last throughout retirement from a pension provider with a legal duty to put their interests first, a new survey has revealed.
The YouGov1 survey was commissioned by leading workplace pension provider The People’s Pension2, following the publication of the ground-breaking New Choices Big Decisions3 report earlier this year, which, based on extensive interviews, found that many older savers are sleepwalking into retirement and run the risk of running out of pension savings years before they die. This study was first launched following the introduction of pension freedoms4, which has meant that individuals either must make a choice between a variety of financial products to finance their retirement or withdraw their pension savings.
The survey presented respondents with a selection of options for spending their pension savings during retirement. It found that nearly four in ten (37 per cent) of those who are saving for retirement would be prepared to be guided towards taking a pension that was split between giving them a guaranteed regular income (an annuity) and the rest as a flexible income pot (drawdown) after taking the tax-free lump sum up-front. A further 35 per cent chose a guaranteed regular income (an annuity) only option after taking the tax-free lump sum.
The survey also highlighted how unprepared for retirement planning many people are:
- More than a third (35 per cent) don’t know when they will retire. For those aged 55 and over, more than a fifth (22 per cent) are uncertain of when they will stop working.
- Just over one in ten (12 per cent) knew or guessed the weekly value of the UK State Pension5. This knowledge is as low as three per cent for 18-24 year olds and is only as high as 25 per cent for those aged 55 and over.
- Just under half (48 per cent) said they don’t know how long their retirement savings will need to last them, including 45 per cent of those aged 55 and above.
- Nearly three in ten (28 per cent) of everyone surveyed, say they have no idea what to do with the savings they have built up for their retirement.
Phil Brown, the director of policy and external affairs at B&CE, the provider of The People’s Pension, said: “This latest research provides further evidence that pension savers are crying out for guidance about how they should approach retirement. It’s clear there is an opportunity for the industry and master trusts are well placed to meet it.
“Master trusts have an opportunity to develop the retirement products which will meet the needs of many for security as well as providing flexibility. This means a coming of age for well-governed auto enrolment schemes – as they move from being saving vehicles for employees to also providing their pensions in retirement.”
- All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,116 adults. Fieldwork was undertaken between 12th – 15th February 2021. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).
- The People’s Pension is a leading workplace pension scheme from the not-for-profit B&CE Group, with more than five million pension savers from over 90,000 employers and £13 billion assets under management.
- The latest New Choices Big Decisions report was published in January. See the report here: https://thepeoplespension.co.uk/media-centre/policy-research/new-choices-big-decisions-5-years-on/
- Pension Freedom and Choice were introduced in 2015. Click here for more information
- The value of the full new UK State Pension is £175.20 a week. Respondents giving a value of between £165 and £185 were considered to be within range of the correct figure.