Just a quarter of those approaching retirement use, or plan to use, regulated financial advice

A new survey by Dunstan Thomas looks at baby boomers’ attitudes to retirement and pensions. Adrian Boulding, the company’s director of retirement strategy, comments on key findings to Harriet O’Brien.

Aged from 58 to 75, baby boomers account for about 20 per cent of the UK population yet control nearly 80 per cent of the private wealth. For at least the next 10 years boomers will hold a high percentage of all current pension assets in accumulation and decumulation. Retirement technology provider Dunstan Thomas conducted a nine-month, UK-wide study into this significant generation’s preferences leading up to and into retirement.

Nearly half (44 per cent) of the 1,272 respondents to the new Dunstan Thomas survey were still working in some capacity. The results of the study show that of those boomers still employed, 71 per cent anticipate working beyond state pension age to 70 or more, with a third continuing to support their children well beyond retirement.

The poll found that almost a quarter of boomers have non-workplace Defined Contribution (DC) personal pensions or SIPPs, 19 per cent have occupational DC pensions such as auto-enrolment schemes, and 48 per cent have occupational Defined Benefit pensions. A third of boomers expect more than 80 per cent of their total retirement income to come from all pensions, while just one in five expects all their retirement income from pensions. Other non-pensions income provides an average of 29 per cent of total retirement income.

According to the survey, a quarter of boomers nearing their retirement have plans to use, or have already used, regulated financial advice. The youngest segment of boomers, aged 58-61, is the most likely to seek pensions-linked financial advice.

But 36 per cent of those polled said that they “don’t understand the difference at all” between regulated financial advice and guidance from banks or building societies. Of those polled, 15 per cent plan to use, or have already used, guidance services from the likes of Citizens Advice Bureau, MoneyHelper and Pension Wise.

Adrian Boulding, Dunstan Thomas’ director of retirement strategy comments that: “The fact that only 7 per cent of women and 17 per cent of men ‘fully understand’ the difference between ‘financial guidance’ and ‘fully regulated financial advice’ is worrying. I’d argue that if you don’t have a financial adviser, you are unlikely to fully understand the difference between guidance and regulated advice. Advisers, of course, make the difference very clear, and currently more men than women have access to a financial adviser. Guidance services like Pension Wise are very good at presenting options (including the option of doing nothing) but will never advocate a specific course of action.”

One of the chief triggers for seeking regulated financial advice is over assessing sustainable pensions withdrawal rates. Most pensions experts maintain that if clients want an income drawdown plan to last through their retirement they should not take more than 3.5 per cent annually. The average drawdown rate amongst boomers with DC plans and no financial adviser is, however, 3.6 per cent - and more than 6 per cent of boomers are taking out more than 6 per cent of the total value of their policies each year.

“Without financial advice,” says Adrian Boulding “and in the absence of the pensions dashboard to begin during next year, it’s inevitable that many that are approaching retirement and not exploring the purchase of an annuity, and will not have an accurate view of the retirement income they can expect from their mix of investments, pensions and other cash or equity pots once they retire.”