There is a lot of concern from the actuarial class that we are not putting enough money into private pensions to satisfy the needs of the retired, in this section of the FCA 2004 findings on what people think about pensions.
We hear from a large sample of people questioned by FCA who had finished work and were expecting to rely primarily on pensions and secondly on savings and investment. Property related strategies like selling up, downsizing and equity release looks good for 12-13%.
The interesting thing is that the long tail of income sources suggests that people are employing strategies that are not discussed in the pension world. People are more sophisticated than our thinking about them
There appears to be around half of people in retirement very comfortable with decisions they have taken (with just over one fifth feeling uncomfortable and the rest being lukewarm). These aren’t problematic levels but it hardly suggests that we have a retirement system that people are happy with
That retirees are worrying about going to have problems paying for day to day services. This is more worrying than their attitude to the decisions people have taken because it suggests that they worry that some of their strategies are not sustainable
I find it more worrying still that 10% of those in retirement are finding they do not have enough money to pay day to day bills. Reliance on the State Pension leads to one in six people in this position feeling in trouble. One in ten people who have another income that’s bigger than the state pension suggests that financial difficulties persist for those with much larger income. This suggests that the financial crisis is with middle earners.
All the same , the numbers of people complaining that they are out of their comfort does not suggest problems, certainly the crisis my peer group has been warned will be facing us since for forty years.
What these numbers tell me is that people make do with what is coming their way and are ingenious.
But it is also telling us that the FCA are focussing on income in retirement across a wide and varied selection of retirees.
We are currently asking Government to increase contributions to pensions but for those questioned the issues about current income paid today and more pertinently tomorrow.
I hope that we will look more into what retirees can do to increase the amount of income they can generate from pensions, savings and investment.
With the exception of defined benefit pensions and the annuity market, there are no pensions focussing on paying pensions. I hope that we will focus more in the future on the lots of those in the early years of retirement .
We should be thinking more about those making it to retirement.
