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Retirement Planning: Pre-retirement - UK - September 2015

“Online tools that provide projections of what pension funds may be worth based on current contributions by an expected retirement date will help savers to take a more goal-oriented approach to their retirement planning. Services like this could be the key to bringing retirement planning to the fore much earlier than is currently the case.”

- Rich Shepherd, Financial Services Research Analyst

This report covers the following areas: 

  • Is traditional retirement under threat?
  • Goals-oriented planning could be key to early engagement
  • Is online guidance a threat or opportunity for advisers?

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Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • The market
            • DC pension ownership is up, but retirement competes with other saving goals
              • Advisers look to plug the advice gap
                • The consumer
                  • One in three adults have a pension but inequalities remain
                    • Figure 1: Pension and savings product ownership, July 2015
                  • Traditional retirement is waning
                    • Figure 2: Expected plans for retirement, July 2015
                  • Just 41% are confident they will save enough for a comfortable retirement
                    • Figure 3: Agreement with attitudes towards pensions, July 2015
                  • Employers and online research are the top sources of information …
                    • Figure 4: Pension and retirement income information sources used, July 2015
                  • Online research is a threat to paid-for advice
                    • Figure 5: Expected future pension and retirement income information sources, July 2015
                  • Half have been unaffected by pension freedoms
                    • Figure 6: Impact of 2014 Budget pension changes on retirement plans, July 2015
                  • What we think
                  • Issues and Insights

                    • Is traditional retirement under threat?
                      • The facts
                        • The implications
                          • Goals-oriented planning could be key to early engagement
                            • The facts
                              • The implications
                                • Is online guidance a threat or opportunity for advisers?
                                  • The facts
                                    • The implications
                                    • The Market – What You Need to Know

                                      • DC pension ownership is growing, thanks to auto-enrolment …
                                        • … but saving for retirement faces competition for spare funds
                                          • The state pension age is rising as retirements get longer
                                            • Legislative reforms have changed the landscape
                                              • Advisers look to plug the advice gap
                                              • The Retirement Planning Environment

                                                • Auto-enrolment boosts DC pension ownership
                                                  • Figure 7: Pension provisions of UK workers, by type of pension, 2005-14
                                                • A third plan to focus on saving on retirement in the next five years
                                                  • Figure 8: Motivation for saving (any rank), July 2015
                                                • Longer retirements require better planning
                                                  • Figure 9: Actual and projected life expectancies at 65, by gender, 1981-2062
                                                • … and less state support
                                                  • Figure 10: Projected dates for full transitions to increased state pension ages, by gender
                                                • Reforms take effect
                                                • Recent Developments in Retirement Planning

                                                  • Pension Wise expands after launch
                                                    • The advice gap will be served by the rise of online services …
                                                      • … and simplified advice
                                                      • The Consumer – What You Need to Know

                                                        • One in three adults have a pension but inequalities remain
                                                          • Traditional retirement is waning
                                                            • Just 41% are confident they will save enough for a comfortable retirement
                                                              • Pensions are still first choice
                                                                • Lack of engagement could be a barrier to greater saving
                                                                  • Online research is a threat to paid-for advice
                                                                    • Half have been unaffected by pension freedoms
                                                                    • Pension and Savings Product Ownership

                                                                      • A third of adults have a pension
                                                                        • Figure 11: Pension and savings product ownership, July 2015
                                                                      • Pension ownership grows with age
                                                                        • Figure 12: Any pension ownership, by age, July 2015
                                                                      • … while income is also a key factor
                                                                        • Figure 13: Any pension ownership, by gross annual household income, July 2015
                                                                      • 18% of over-45s have no savings provisions
                                                                      • Retirement Expectations

                                                                        • A third plan to work beyond the state pension age
                                                                          • Figure 14: Expected plans for retirement, July 2015
                                                                        • Phased retirement on the rise?
                                                                          • Figure 15: Expected retirement plans, by age, July 2015
                                                                        • Lifestyle factors matter as much as financial pressures
                                                                          • Figure 16: Main reason for planning to work beyond state pension age, July 2015
                                                                      • Attitudes towards Pension Contributions

                                                                        • Will increased contributions come too late?
                                                                          • Figure 17: Attitudes towards pensions, July 2015
                                                                        • Just 41% are confident of a comfortable retirement
                                                                          • Figure 18: Response to the statement “I am confident that I will have enough money saved for a comfortable retirement”, by age and gender, July 2015
                                                                        • … but most are happy with employer contributions
                                                                            • Figure 19: Agreement with the statement “I am satisfied with the pension contributions offered by my employer”, by gross annual household income, July 2015
                                                                          • Future concerns may affect plans more than people think
                                                                            • Figure 20: Response to the statement “I am confident that I will have enough money saved for a comfortable retirement”, by expected retirement plans, July 2015
                                                                        • Attitudes towards Retirement Planning

                                                                          • Pensions are still the go-to choice for retirement saving …
                                                                            • Figure 21: Attitudes towards pensions, July 2015
                                                                          • … but people don’t rely on DC schemes as much as DB
                                                                            • Figure 22: Agreement with the statement “My pension is likely to be my main source of income in retirement”, by type of pension held, July 2015
                                                                          • Uncertainty knocks confidence in long-term planning
                                                                          • Attitudes towards Pension Value

                                                                            • Only half regularly engage with their pension …
                                                                              • Figure 23: Attitudes towards pensions, July 2015
                                                                            • … and lack of understanding of fees could be a barrier to saving
                                                                            • Retirement and Saving Advice

                                                                              • Employers and online research are the top sources of information …
                                                                                • Figure 24: Pension and retirement income information sources used, July 2015
                                                                              • … but 29% are yet to seek any advice or guidance
                                                                                • DC pension holders are the most likely to use an IFA
                                                                                  • Figure 25: Expected future pension and retirement income information sources
                                                                                • Pension Wise use will grow as it becomes more established
                                                                                • Impact of Pension Freedoms

                                                                                  • Pension freedoms have had no effect on half of consumers’ plans
                                                                                    • Figure 26: Impact of 2014 Budget pension changes on retirement plans, July 2015
                                                                                  • … while a quarter are more inclined to seek advice or guidance

                                                                                  Companies Covered

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                                                                                  Retirement Planning: Pre-retirement - UK - September 2015

                                                                                  £1,995.00 (Excl.Tax)