Less than a quarter feel in control of their pension

Less than a quarter (23%) of respondents feel in control of their pension, according to research by Hymans Robertson. 

Pension savings-retirement-2015

Its research, which surveyed 2,078 people, also found that 68% said fewer changes to the pension system would encourage them to save more.

The research also found:

  • 64% of respondents do not know what their income will be in retirement.
  • Just under half (48%) do not feel in control over their pension savings because the system changes too much.
  • More than half (53%) lack confidence that the government will not change the tax treatment of pensions before they retire.
  • 37% of respondents feel there is no point in learning about pensions because the rules change all the time.
  • When asked what would make them feel more in control, 39% said a long-term plan for pensions from the government, 39% said fewer changes to pensions by the government and 34% said clearer communications from the government in relation to their pension.

Chris Noon, partner at Hymans Robertson, said: “What is clear is that people feel a lack of control over their pensions. This contributes to ‘rational ignorance’, in other words, savers feel it’s pointless to try and understand the system due to government changes.  

“This helps to shine a light on why financial education efforts largely fail. People resist education [because] they feel there is no point as the system will change and their efforts will be wasted.” 

“It’s clear that implementing a huge change such as a shift to a Taxed Exempt Exempt (TEE) pensions system [where scheme members would be taxed on their contributions, rather than when they retire or take their pension] will not strengthen the incentive to save. 

“On balance, savers prefer the status quo as changes to the system make them feel vulnerable and add to a sense of a lack of control. People also value and are very enthusiastic about the tax-free cash lump sum; a tangible benefit they don’t want taken away. They value the ability to take some cash at retirement, but they also value the fact that it’s not all ‘tax free’ as it acts as a brake on spending. 

“The fact remains that the majority of people in the UK are going to be disappointed when they reach retirement because they are not saving enough. Freedom and choice in pensions, which allows people to access pension savings from age 55, could exacerbate the problem.”

 

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