Retirement Appears Worse for Those Approaching it

The second annual Financial Planning Through Retirement study, which draws on research with consumers and IFAs across the UK, found more people in 2011 were worried they had insufficient income to see them through retirement.

According to section five of the 36-page study, published jointly between Aifa and Prudential UK, few believed the income in retirement would be enough to let them maintain the lifestyle they wanted.

The research said nearly 70 per cent of those at retirement in 2010 thought their income could help them achieve their goals, which fell to less than 50 per cent in 2011.

The number of those expecting to have to work in retirement remained roughly the same as last year, as well as roughly equal figures among those expecting to have an income gap.

However, another benchmark indicator found the willingness of IFAs to give advice had fallen - in 2010, those with a £25,000 pension fund and no other investments could expect full advice from 33 per cent of IFAs; this had fallen to 24 per cent.

This presented a “worrying trend” according to the report, which said: “The importance of these findings should not be underplayed, because they relate to issues and decisions that affect the financial position of these consumers.”

Some 221 IFAs active in the pension and investment arena were surveyed, along with 1067 consumers, split between those with assets of £25,000 and over - 463 people - and those with less than £25,000 to invest - 388.

Stephen Gay, director-general of Aifa, said despite growth in the enhanced and impaired annuities market, as well as government initiatives such as the National Employment Savings Trust, many consumers remain confused, and advice was still desperately needed or it would be a “greater cost to society as a whole”.

The report also called for government to work with employers to ensure advice was available within the workplace, and to remove the £150 tax limit for financial advice for employees, which would “help to encourage firms and employees to access independent financial advice and make better provision for themselves.”

Mike Fry, director of Cheshire-based IFA Halton Insurance Services, said: “As inflation goes, people’s pensions have reduced in real terms.

“So people should choose the best options from IFAs. If you go to the banks, they will introduce you certain products and there is no chance for clients to shop around.”

SOURCE: http://www.ftadviser.com/2011/10/26/pensions/group-pensions/retirement-appears-worse-for-those-approaching-it-8e8GGNhfe3LLxzj9ek6sNL/article.html