UK adults show 'unprecedented retirement engagement' in wake of reforms
People are more aware of the intricacies of retirement saving than they have been in the past, according to the findings of new research.
Carried out by business information firm Platforum, the study attributed this trend to the government's pension reforms, with many respondents even claiming they are now saving more than they ever have before because of the new pension freedoms.
Working adults and investors alike were revealed to be in this position. Some 69% of adults aged between 22 and 64 and 98% of investors said they are aware of the reforms to the national pension system. Many realise that they now have a greater degree of control over how to use their savings. Despite this, a lack of understanding on certain details was identified, particularly with regard to the new tax rules.
The reforms are broadly seen as a positive thing, with 32% of investors professing excitement at the developments. Platforum noted that its previous research suggested people prefer to spend as little time as possible managing their pension. However, the reforms may have heralded a shifting attitude in this respect, as many respondents said they have been following news about the changes with interest.
Almost half of all working UK adults and nearly three-quarters of active investors say they are set to increase the amount of money they set aside in a pension fund because of the reforms.
However, Platforum raised concerns that far too many people still hope to rely too heavily on the state pension to finance their later lives. Working adults said workplace savings and the state pension are likely to remain their two most important sources of retirement income.
It was suggested that this could be a lingering naivety relating to how far money offered by the state pension will stretch. The new flat fee pension is expected provide annual income of an estimated £7,900.
If people hoping to rely on this funding expect to maintain the same standard of living in retirement as they enjoyed in working life, they could run the risk of having an income level and lifestyle that falls far short of their expectations.
Research Director for Platforum, Heather Hopkins said: "Our research also reveals that while engagement with the reforms is high, people have thought little about how they will fund their retirement and expect to rely far too heavily on the state pension."
Seeking the support of an independent financial adviser can help people approaching retirement identify the pension products that are most closely tailored to their individual requirements, as well as offering advice on how to maximise pension saving and income in later life.
"Working adults show an unprecedented level of engagement with investing and saving for retirement as a result of the pension reforms," Ms Hopkins commented.
"Awareness is extremely high of the pension reforms and while investors get a bit lost on the detail there is a clear understanding that the reforms give people more control and responsibility for their retirement savings."
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