UK consumers reliant on others for comfort in retirement despite pension reforms
In spite of the individualism underlying George Osborne’s pension reforms, UK consumers still see other parties as responsible for their financial comfort in retirement, according to a survey by AXA Life Invest.
The AXA Life Invest survey polled a nationally representative sample of 1,007 UK adults on their attitudes towards pensions and retirement.
Coming as the government promotes individual ‘freedom and choice’ in the Budget’s pension reforms, it found that although UK adults assume primary responsibility for their own financial security in retirement (88 per cent chose ‘me’ as most responsible), they aren’t willing to go it alone. Over half (55 per cent) of UK adults think their pension provider is ultimately responsible for their financial comfort in retirement, while almost half (49 per cent) hold the government accountable for their golden years.
AXA Life Invest also found that the young are much less likely than others to take individual responsibility for their retirement savings. Those aged 20-29 are most likely to rely on their pension provider (62 per cent) and 60 per cent said that the government bears responsibility.
Furthermore, the survey showed that financial advisers are set to benefit, with people demonstrating a hugely positive attitude towards financial advice and future planning. When asked how early they should approach an adviser to begin pension planning, over half (57 per cent) of UK savers said 15 years before retirement. This was especially pronounced among people with young children.
However, only three per cent said they would seek advice at retirement, demonstrating that the government’s guidance guarantee has to happen before retirement if it is to meet people’s expectations.
Simon Smallcombe, UK managing director, AXA Life Invest, says: “The individual freedom created by the pension reforms has been welcomed by many savers, but our survey suggests that both providers and advisers will still have a big role to play in making this work.
“For a start, over half of people think their pension provider is most responsible for their financial comfort in their golden years. People approaching retirement will discover that they are wholly responsible for their financial comfort, but nevertheless, this statistic provides a big incentive for innovation as it foreshadows a growth in demand for alternatives to annuities. We are likely to see more and more products coming to market over the coming months offering consumers the freedom and choice they need.
“Financial advice will also be critical to the success of these reforms. The government has guaranteed free guidance to help people make the retirement choices which best suit their needs, but our survey shows a very real demand for financial advice – which is very different to guidance – at least fifteen years prior to retirement. We agree with this feeling, as in our experience, financial advisers have the best opportunity to help people boost their retirement pots at least a decade before their actual retirement age.
“There is a gap between people’s expectations and what the government will actually deliver here, and advisers are well-placed to help close it.”
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