Pension changes : opportunity or threat for the retirement-ready?

29th March 2015

There are exciting times ahead for the financial services industry with one of the most widescale reforms in recent years set to come into force imminently.

Much has been made in the media of the dangers of this reform, but our research with ‘at-retirement’ consumers suggests that, in contrast, they welcome the changes…but are proceeding with caution.

Whilst consumers are looking forward to having access to their savings, they are mindful that their pension pot has or will become their financial ‘centre of gravity’.  As a result we’ve seen evidence of a careful and mature approach to drawing down on their pot rather than a ‘spend and be damned’ mentality!  Over 55’s are very aware that mistakes will be made as a result of this new pension regime, but their antenna are raised to potential mistakes and reckless spending and want to ensure that they do not become victims.

In contrast to many of the views expressed in the media about this new pension freedom, our research uncovered three main positive opportunities from the customer perspective :  Increased empowerment in decision making, a greater sense of control, and enhanced flexibility and freedom to be able to tailor their pension pot to suit their needs.

We believe the biggest opportunity will be for Independent Financial Advisers and Providers as the over-55s will be turning to them for informed advice.  Despite feeling empowered and having greater flexibility over their pension pot, they are seeking support; they want to understand what they can take out of their pension savings, and what the implications are of drawing down as well as understanding how they should continue to invest.  The opportunity for Independent Financial Advisors and Providers is to provide honest, transparent and straightforward advice to help people on their journey.

In short, it’s time the industry starts treating ‘at-retirement’ consumers with the respect they deserve…evidence suggests they will be proceeding with caution, consulting appropriate sources of advice, and they have the ‘nouse’ to be able to make wise financial decisions over the savings that they have worked so hard to accrue.