Man looking worried
Well done the Pensions Trust which continues to explore the mismatch between what people want at retirement and what they get. This from Professional Pensions.
Only one third (35%) of pension savers say they are confident in making retirement decisions, research from TPT Retirement Solutions has found
The survey of more than 2,500 defined contribution (DC) members found two in five (39%) said they did not know what they will do with the majority of their savings at retirement age.
It also found the majority (79%) said they did not plan to use a financial adviser to make retirement decisions, while the majority (62%) said they supported a potential pot for life solution.
In addition, 68% said they would be interested in a default decumulation-style drawdown product to provide a steady income stream, the survey found.
Venturing fearlessly beyond the Professional Pensions article, I find an expanded version of the summary of the research, though sadly not the research itself which presumably can be accessed via TPT’s PR team.
Philip Smith is on hand to provide some insight
“Our research shows many people are worried about what to do with their pension when they come to retire. Lots of people don’t know what to do with their savings but are also unwilling to pay for professional financial advice. The launch of our new DC offering later this year should help address these issues in making decisions for retirement easier. It is encouraging to see wider industry reforms are similarly focusing on this, and that the scheme savers themselves are in support of such measures, such as the introduce of a pot-for-life system. These changes can help drive pension engagement by giving individuals the agency to make choices over their retirements, and hopefully build pension savers confidence.”
I’m not sure what “pot for life” has to do with retirement choices, other than making choices from one pot is rather easier than from a lot of pots.
What is clear from this research is that the “investment pathway” approach, employed by most schemes, is not much use if what you want is to be told what to do by a default.
People love having “agency”, but hate using it. Defaults aren’t offering “agency” on savings, they are telling people they are free not to exercise their pension freedoms but to follow the path “people like us” tend to take.
Without the availability of advice, people need defaults they can trust to do things for them, like paying a pension for as long as they need the income.
If that pathway is “drawdown” as the research suggests – so be it. But in my experience, drawdown does require “agency” , if only to ensure that the money lasts as long as we do.
There is a sequel to this shot across the bows and I hope, as intimated to the market, TPT launch some form of collective decumulation plan that does more than allow people to drawdown their pot as a decumulation default. Right now, we need a little more and TPT are the kind of organisation that can offer it.