Table of Contents
Executive Summary
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- The retirement planning environment
- An ageing population will increase the burden on the state…
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- Figure 1: Actual and projected life expectancies at 65, by gender, 1981-2062
- …so more responsibility is being put onto the individual
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- Figure 2: Pension provisions of UK workers, by type of pension, 2005-14
- Pension freedoms have prompted a surge in income drawdown
- The consumer
- 40% have a pension
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- Figure 3: Savings and investment product ownership, October 2015
- Existing pension providers are heavily favoured over others
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- Figure 4: Non-retired pension holders’ actual and expected use of sources of retirement planning advice/guidance, October 2015
- Retirees favoured expert advice
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- Figure 5: Retirees’ actual and expected use of sources of retirement planning advice/guidance, October 2015
- Face-to-face advice is the top choice but online has potential
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- Figure 6: Interest in using different channels of advice/guidance for retirement planning, October 2015
- Employment and property are key to supplementing income
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- Figure 7: Non-pension incomes expected to be received in retirement, October 2015
- Better understanding of retirement options is needed
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- Figure 8: Understanding of the pension freedoms reforms, October 2015
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- Figure 9: Confidence in finding information about retirement options, October 2015
- People are aware of the need to save, but don’t expect to do enough
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- Figure 10: Attitudes towards retirement planning, October 2015
- What we think
Issues and Insights
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- Rise of the robo-advisers
- The facts
- The implications
- Are people making the most of increased choice?
- The facts
- The implications
- More awareness, less understanding?
- The facts
- The implications
The Market – What You Need to Know
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- An ageing population will increase the burden on the state…
- …so more responsibility is being put onto the individual
- Pension freedoms have prompted a surge in income drawdown
- New and old solutions for the advice gap problem
Retirement Planning Environment
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- Longer lives, longer retirements
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- Figure 11: Actual and projected life expectancies at 65, by gender, 1981-2062
- An older, more dependent population
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- Figure 12: Percentage of UK population, by age band, and dependency ratios, 2014-64 (based on 2014 projections
- Women’s state pension age to rise to 63 in March 2016
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- Figure 13: Projected dates for full transitions to increase state pension ages, by gender as of 2015
Retirement Funding Options
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- Auto-enrolment is driving a surge in DC membership…
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- Figure 14: Pension provisions of UK workers, by type of pension, 2005-14
- …while membership of personal pension schemes is falling
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- Figure 15: Number of personal pension schemes in force, 2009-14
- 60% rise in ISA deposits
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- Figure 16: Number of ISAs and amounts subscribed, segmented by component type, 2008-09/2014/15
- Surge in income drawdown as annuities sales plummet
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- Figure 17: Volume and value of new annuities and income drawdown contracts, 2010-15
- The role of property
Retirement Planning Advice Summary
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- Pension Wise problems
- Advice returns to the high street?
- Online services seek to plug the advice gap
The Consumer – What You Need to Know
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- 38% of non-retirees have a pension
- Existing pension providers are heavily favoured over others
- Retirees favour expert advice
- Face-to-face advice is the top choice but online has potential
- Employment and property are key to supplementing income
- Better understanding of retirement options is needed
- People are aware of the need to save, but don’t expect to do enough
Savings and Investment Product Ownership
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- 40% of internet users have a pension
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- Figure 18: Savings and investment product ownership, October 2015
- ISAs offer an alternative to pensions
- Work to be done to improve youth engagement…
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- Figure 19: Pension ownership, by age, October 2015
- …while gender inequality still exists
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- Figure 20: Pension ownership, by gender, October 2015
Non-retirees’ Use of Sources of Advice/Guidance
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- Existing pension providers have a big advantage
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- Figure 21: Non-retired pension holders’ actual and expected use of sources of retirement planning advice/guidance, October 2015
- Importance of guidance from family and friends is holding back Pension Wise
- Non-pension holders have a healthy appetite for future advice
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- Figure 22: Non-retired non-pension holders’ actual and expected use of sources of retirement planning advice/guidance, October 2015
- Investors are more likely to take advice
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- Figure 23: Non-retirees’ actual and expected use of sources of retirement planning advice/guidance, by investment ownership, October 2015
Retirees’ Use of Sources of Advice/Guidance
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- Expert advice was retirees’ top choice when planning for retirement…
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- Figure 24: Retirees’ actual and expected use of sources of retirement planning advice/guidance, October 2015
- …but very few plan to take further advice or guidance
- Are employers taking a more active role in retirement planning?
Interest in Advice/Guidance Channels
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- Familiarity of face-to-face advice is unmatched by alternatives…
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- Figure 25: Interest in using different channels of advice/guidance for retirement planning, October 2015
- …but interest in online services points to large growth potential
Alternative Retirement Incomes
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- A third plan to work beyond the state pension age
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- Figure 26: Non-pension incomes expected to be received in retirement, October 2015
- 29% of homeowners plan to draw an income from their property
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- Figure 27: Selected homeowners’ non-pension incomes expected to be received in retirement, October 2015
- Inheritance is relied upon by many but estates are being squeezed
- Pension holders have a clearer idea of additional income streams
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- Figure 28: Non-pension incomes expected to be received in retirement, by pension ownership, October 2015
Understanding of Pension Freedoms Reforms
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- The clear need for guidance and advice…
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- Figure 29: Understanding of the pension freedoms reforms, October 2015
- …and better promotion of services
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- Figure 30: Confidence in finding information about retirement options, October 2015
- Pension holders have better understanding of their options
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- Figure 31: Understanding of the pension freedoms reforms, by pension ownership, October 2015
Attitudes towards Retirement Planning
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- Just 18% are confident of having a comfortable retirement
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- Figure 32: Attitudes towards retirement planning, October 2015
- A third think too many people leave it too late to plan for retirement
- 14% expect to be paying a mortgage or rent in retirement
- Pension holders are more likely to be confused by retirement options
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- Figure 33: Agreement with selected attitudes towards retirement planning, by pension ownership, October 2015
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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