By Kevin Hollister - Founder & Actuary at Guiide
These visitors find us primarily through search engines and referrals from other sites who provide information and help on pensions.
Our analysis shows that up to 100,000 people search for the type of help we provide each month.
With the vast majority of people now reliant on defined contribution pensions to accumulate pension savings for retirement and the
Pension Freedom changes allowing much more flexibility in how these can be taken, the optimal route would be for people to take advice.
However, it has become clear through FCA and adviser surveys that only around half of those at retirement are taking advice, with a far smaller proportion taking advice when building up funds for a target income.
It would seem natural therefore, for this non advised mass market (as the FCA has termed them) to turn to their employer, scheme or provider to help address this gap in pensions related advice, by providing planning tools and other support.
We ran a poll of around 100 of our users to establish if this was the case. All had finished building a plan within our site and were then asked why they were seeking the help we provide.
We specifically asked, Do you get the support you need around pension planning from your existing employer, scheme or provider?
• 50% said they received no support at all
• 35% some but not enough support
• 15% said they believed they got what they needed
In total therefore around 85% believed they were not getting the support they needed from where they would instinctively turn to for this.
It may of course be the case that visitors to our site would be expected to answer this way. Why are they looking for help in the first place? However, from our own research into the help provided and the volumes of people seeking further support each month, it seems the support provided, if any, is falling short of expectations in many cases, for the large number of people looking for it.
This leads to a major concern. The Pensions Freedoms have been in place for a number of years now, bringing strongly welcomed flexibility for pension savers, but also vastly more responsibility on the individual themselves around planning retirement.
Whilst there have been excellent innovations to help people understand the retirement income needed and the type of lifestyle this may entail, such as the Pension and Lifetime Savings Associations (PLSA’s) Retirement Living Standards, real practical tools to help people achieve these outcomes, seem to be far behind the curve. The industry and schemes are playing catch up here to some degree.
If advice levels stay at the current rates, without further innovation in non advised guidance and support, the primary risk of introducing the Pension Freedoms, i.e. people running out of money due to an unrealistic withdrawal strategy in retirement, becomes increasingly real.
Alongside this, other risks such as poor investment choices, or reducing the pots available for income through unnecessary charges and tax also become more evident.
In summary, from a self interest viewpoint, the lack of support provides us with opportunity. Less support means more people searching for our help, so we can help more people who manage to find us.
However, from an overall consumer perspective and policy objective, the lack of support provided in this area, from those who people are first likely to turn to, is worrying. It is very unlikely to achieve the best retirement outcomes for as many people as possible who choose to, or are aiming to use, the freedoms now available. It would seem from our survey and research that employers and the pensions industry could do much more to support these savers objectives.
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