Earlier this year, the UK retirement landscape underwent its biggest transformation to date, people aged 55 and over were given the freedom to do whatever they wanted with their hard-earned pension savings.
While, by and large, people have behaved more responsibly that might have been expected, our figures show that these reforms are yet to have the desired impact and many are not benefitting from this new-found access to their pensions.
One in five over 50s have never even heard of the pension reforms - despite the monumental impact they have on the way they fund for their retirement. And of those that have heard of them, a third admit that they remain bamboozled by their options. Yet in light of this lack of understanding and confidence, next to none are seeking professional financial advice.
It’s extremely concerning to find that so many over 50s simply don’t know about this huge change to the way they can access their savings, or remain baffled by the reforms. With people spending longer in retirement and living longer overall, their money is going to need to stretch further than they might expect. There is a real danger that today’s over 50s could be missing out on the chance to have a more financially comfortable retirement or, indeed, could be putting their savings in jeopardy.
For too long, many people who could benefit from financial advice have been ignored by the industry. The Government is currently conducting a review into the financial advice industry to see how more people can get access to the support they clearly need when it comes to planning their retirement.
Radical changes must be made - the government and financial regulators need to champion innovation that gives over 50s access to financial advice in an affordable way. At the same time, it’s vital that the review also ramps up financial education for all consumers, and tackles the jargon and hideously confusing pricing that you often find with financial services companies, which stops people engaging with their money and seeking the advice they need.
The Government has done the right thing by giving people the freedom to decide how they want to spend their money once they stop working. But the job’s not over – it must now make sure they have access to the support to make the right decisions and get the retirement they deserve.
Head of consumer affairs, Saga Investment Services
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