On the go: Encouragingly, half of the over-40s in the UK have sufficient basic knowledge of the factors that may influence their later-life income to avoid the worst retirement pitfalls. However, one in 14 people are at high risk of making poor financial choices.
These are the key findings of a new 'Retirement Risk Index' from Just Group, which quizzed 2000 people on their ability to make decisions on their later life-finances.
The research examines the public’s understanding of longevity, the level of state support they can expect to receive in retirement and their attitudes towards accessing and spending private pension savings.
Half had enough basic understanding to be considered low risk, while 43 per cent who lacked some knowledge were at medium risk.
The remaining 7 per cent were high risk, a reflection of poor understanding of longevity and state pension provision, combined with potentially extravagant spending plans.
While the results are reasonably encouraging, dangers lie ahead. Stephen Lowe, group communications director at Just Group, said: “We are seeing record numbers of people accessing their pension pots flexibly and, as it’s still too early to know the longer-term consequences, it is crucial that the industry strives to support consumers with their decisions wherever possible. The results of this research are reassuring yet that should not be a cause for complacency or inertia.”
Steve Webb, director of policy at Royal London, added: “With constant changes in pensions, it is not surprising that many members of the public have only a limited understanding of the system. For that reason, it is vital that the default arrangements, and especially the default level of contributions, are set in a way that delivers good outcomes for the majority of people, whether they engage or not.”
Tom Selby, policy analyst at platform provider A J Bell, took a different tack: “This just hammers home the importance of all parts of the industry focusing attention on improving member engagement. We need to shift away from an approach which is too often driven by regulatory box-ticking and instead ensure communications are designed in a way that ordinary people can understand.”
