Nearly two thirds of British workers are either totally oblivious of the Government’s recent pension freedom laws or have scant understanding of how they are affected, according to a major new survey of UK employees.
The findings also uncover a major worry among those who have a better understanding of the reforms, which give people over the age of 55 access to as much of their defined contributions pension scheme as they choose. Nearly half of those surveyed believe pensioners will be vulnerable later in life, some think the reforms will promote irresponsible spending and around a quarter are concerned that the changes will increase the possibility of fraud.
The survey, commissioned by Towers Watson, also exposes a worrying lack of planning for old age among the UK’s working population. While over three quarters of people surveyed acknowledge that retirement planning is a topic that should be discussed more often, 56 per cent admit they rarely discuss it and only 38 per cent have had a conversation with anyone about it in the last year. The survey also found that, in general, putting money aside as savings is only a financial priority for a third of employees.
Fiona Matthews, Managing Director of LifeSight, Towers Watson’s master trust, stated: “These findings show that people hardly ever discuss savings for pensions and retirement plans and, perhaps partly as a consequence, many UK workers are poorly informed about the Government’s recent pension reforms. This information deficit has the potential to store up major problems in the future, especially as our ageing population means there will be 15.5 million pensioners in the UK by 2030.
“It is not surprising that this lack of interest in discussing retirement planning has caused many to worry they haven’t saved enough for retirement. This is supported by the research which shows that employees are saving, on average, £1,640 less of their salary annually than they think they should.
“However, there are signs that young people in particular are keen to address the retirement savings challenge by having more open discussions and increasing their level of understanding. This is a positive step as, more than ever, the onus is now on individuals to make sure they are saving for later life in order to take advantage of the new choices and freedoms that are available.”
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