Table of Contents
Executive Summary
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- Retirement factors
- Longer lives mean longer retirements…
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- Figure 1: Life expectancy at 65, by gender – UK, 1981-2062
- …and increasing cost for the state
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- Figure 2: Projected expenditure on state pensions and related benefits, 2012/13-2062/63
- Pensions reforms will change the face of retirement income
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- Figure 3: Volume of new annuities sales, 2009-13
- The consumer
- Defined-benefit schemes remain the most common private pensions
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- Figure 4: Ownership of pensions saving products, October 2014
- One in 10 over-45s are in phased retirement
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- Figure 5: Lifestage, by type of income currently being received, October 2014
- Half of over-45s are claiming a pension
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- Figure 6: Types of income currently being received, October 2014
- Most over-45s will not get retirement planning advice
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- Figure 7: Sources of financial advice used for retirement planning, October 2014
- Most expect income to fall in retirement, but three in 10 don’t know what income to expect
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- Figure 8: Expected gross annual household income in retirement, October 2014
- A third expect less state support than previous generations
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- Figure 9: Non-retirees’ attitudes towards retirement, October 2014
- Inheritance and long-term care costs are retirees’ biggest concerns
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- Figure 10: Retirees’ attitudes towards retirement, October 2014
- What we think
Issues and Insights
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- Even older non-retirees are still putting off making retirement plans
- The facts
- The implications
- Is phased retirement a mainstream option in the future?
- The facts
- The implications
- Did retirees get all the advice they could have?
- The facts
- The implications
Trend Application
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- Advisers and insurers can prosper with flexible products for flexible retirees
- Phased retirement needs employers’ assistance
- How to make people care about their care
The Post-Retirement Consumer
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- Key points
- Life expectancy projected to continue rising
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- Figure 11: Life expectancy at 65, by gender – UK, 1981-2062
- Over-55s will account for a larger share of the population
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- Figure 12: UK population, by age, 2014-34 (based on 2012 projections)
- The UK government plans to raise state pension spending
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- Figure 13: Projected expenditure on state pensions and related benefits, 2012/13-2062/63
- People are working later in life
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- Figure 14: Average age of withdrawal from the labour market using the static indicator, by gender – UK,1984-2012
- For many, longer life will mean living longer with illness
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- Figure 15: Period life expectancy, healthy life expectancy and disability-free life expectancy at 65, by gender, 2008
- Individual pension business falls sharply, while workplace pensions rise
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- Figure 16: Total regular individual pension business and regular individual workplace pension business in force at year end, volume and value, 2009-13
- The move away from DB to DC opens retirees up to greater financial risk
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- Figure 17: Occupational pension schemes in force, volume and value, 2004-13
- Annuities market plunges following the 2014 Budget changes
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- Figure 18: Volume and value of new annuities sales, 2009-13
- The number of drawdown policies continues to grow
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- Figure 19: Income drawdown in force, 2009-13
Pension Product Ownership
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- Key points
- Four in 10 over-45s have a DB pension…
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- Figure 20: Ownership of pensions saving products, October 2014
- …while just 11% have a DC pension
- Pensions remain misunderstood by many
- Growth needed in pension ownership among lower socio-economic groups
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- Figure 21: Ownership of pensions savings products, by socio-economic status, October 2014
The Phased Retirement
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- Key points
- One in 10 over-45s are phasing in their retirement
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- Figure 22: Lifestage, by type of income currently being received, October 2014
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- Figure 23: Phased retirement motives matrix, October 2014
- The luxury of being able to choose your own retirement date
- Age is still a key determinant of working patterns
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- Figure 24: Lifestage, by type of income currently being received, by age, October 2014
- Phased or delayed?
Current Sources of Income
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- Key points
- Half of over-45s are currently claiming a pension
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- Figure 25: Types of income currently being received, October 2014
- A fifth of 65-74-year-olds are still working
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- Figure 26: Percentage of consumers receiving income from employment, by age, October 2014
- Most have more than one type of income
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- Figure 27: Repertoire analysis of types of income currently being received, October 2014
- Non-pensions savings could become more important income sources
Sources of Financial Advice
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- Key points
- Free guidance providers have made almost no impact
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- Figure 28: Sources of financial advice used for retirement planning, October 2014
- A third use financial advisers…
- ...but more than half get no advice
- Cost is the main barrier to adviser use
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- Figure 29: Use of/expected use of financial advisers^ for retirement planning, by gross annual household income, October 2014
- Phased retirees are the most likely to get advice
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- Figure 30: Use of/expected use of financial advisers* for retirement planning, by lifestage, by type of income currently being received, October 2014
Expected Retirement Income
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- Key points
- Three in 10 over-45s do not know what income to expect in retirement
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- Figure 31: Expected gross annual household income in retirement, October 2014
- Consumers expect their income to fall in retirement
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- Figure 32: Current gross household income, vs expected gross annual household income in retirement, October 2014
Non-Retirees’ Attitudes towards Retirement
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- Key points
- Many are aware that state support for old age is waning
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- Figure 33: Non-retirees’ attitudes towards retirement, October 2014
- People can be persuaded to use free guidance
- 17% are relying on sale of assets to fund retirement…
- …while only 12% are making plans for long-term care
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- Figure 34: Agreement with the statement “I’m already starting to plan for how I’d potentially pay for long-term care”, by type of pensions saving product held, October 2014
Retirees’ Attitudes towards Retirement
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- Key points
- Leaving an inheritance is the biggest concern for retirees…
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- Figure 35: Retirees’ attitudes towards retirement, October 2014
- …while 31% of retirees are worried about paying for their long-term care
- A quarter feel let down by low savings rates
- A tenth regret not planning more for their future
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- Figure 36: Agreement with the statement “I regret not having done more to plan for my retirement”, by socio-economic status, October 2014
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