How do we stop a generation from sleepwalking into retirement?
Five years on from the introduction of Pension Freedoms, new research by The People’s Pension and State Street Global Advisors has shown that mature savers are sleepwalking into retirement. They risk running out of Defined Contribution pension savings and, with a third of their retirement still to come, could spend their later years reliant on the state pension.
In-depth research by consultancy Ignition House explores both retirement planning and spending habits following the introduction of freedoms in 2015. The study reveals that people nearing retirement want their pension provider to supply a safe, guided path into retirement—rather than the complex decisions with which they’re now faced.
Key findings include:
– Savers are scared of planning for the future as they don’t want to discover the “truth”
– Savers also underestimate the financial risk of growing old and don’t understand how inflation can impact their savings
– The typical saver follows the path of the least resistance
—they won’t leave a product or change a drawdown withdrawal rate once they have signed up.
What do pension schemes need to offer to meet the risks of retirement and how do we better enable savers to understand and access those solutions?
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