New research by TD Direct Investing reveals what the UK plans to do with its pensions, and highlights the need for industry involvement in educating the UK’s savers
-
2 in 5 people (40%) plan to withdraw part or all of their pensions once the pension reforms come in
-
46% of respondents over 30 feel they have not had enough guidance to make the best decision on their pension
-
Almost half of the country (48%) do not trust the pensions industry
-
50% of respondents (and 60% of Londoners) are confident their property will support them in later life
The pension reforms coming into effect 6 April, will allow anyone over the age of 55 to cash in all or part of their pension. Ahead of this radical change for the UK, DIY Investment broker, TD Direct Investing, has published new research into individuals’ plans for their pensions.
The research reveals that the UK’s pension-holders plan to take advantage of their newfound freedom, with 2 in every 5 Brits (40%) planning to withdraw a significant portion of their pensions when the changes come in.
Trust in the pensions industry plummeting
Worryingly, despite the UK savers’ plans to cash their pensions, it appears that many of them feel they are not equipped to decide what to do with them in a highly diverse investment environment. Nearly half (46%) of respondents admit they have not had enough guidance to make the best decision on their pensions.
It also highlights that confidence in the pensions industry is wavering, with 48% of respondents stating that they no longer trust the industry.
Carl Howard, Commercial Director, TD Direct Investing says
“It is clear that there is a real need for unbiased and coherent support for pension holders. If this worrying divide between the UK’s savers and the pensions industry means that people are not making the best decisions for their financial futures, then we need to work together with the government to solve this. It is up to us in the investment industry to work on overcoming pension holders’ concerns, and offer the transparency and guidance they will need to again have trust.”
Investors favour property over pensions
Despite this wavering trust in pensions, confidence in the property market appears to be soaring. TD Direct Investing’s research aptly demonstrates the UK’s current fixation on investing in property at the expense of traditional investments (such as pensions or Isas). 50% of respondents claim they are confident their property will support them in later life. This figure is even higher in the UK’s capital; 60% of Londoners believe their property will support them in the future.
Carl Howard says “Whilst it’s important for pension savers to feel confident in their choice of investment, it’s easy to become blinkered when considering long-term sources of income. This is where the investment industry has an important job to do in educating the investor on the range of choices available and supporting them in making their decisions.”
Men vs women: how do they invest?
The research also reveals some interesting discrepancies between genders and how they consider their pensions. Women tend to be more risk adverse than their male counterparts, with only 34% of women planning to dip into their pensions fund vs 44% of men. Women also appear less likely to squander their pension: less than a quarter of women (24%) intend to cash in their pension to go on holiday, whilst a third of men (33%) plan to use it to this end.
Generation X and the baby boomers: how will the reforms affect them?
The older generation plan appear readier to take advantage of the new pension changes with almost 1 in 5 (19%) claiming that they would at least consider withdrawing over 70% of their pension, whilst only 8% of 30-44 year olds intend to do the same.
Having the freedom to realise these ambitions is one of the key advantages of the upcoming pensions reforms. Carl Howard is keen to stress that while the investment industry has an important role to play in educating pension holders, it’s crucial that investors retain the autonomy the upcoming pension reforms grant them: “Ultimately, the pension reforms will benefit the UK’s savers as it gives them more freedom over their finances and more choice. As an industry, we have a responsibility to pension holders to provide them with the necessary information and the right support to help them make their decisions. However, at the end of the day, we have to respect that the choice lies with them.”
TD Direct Investing has partnered with The Pensions Advisory Service to provide guidance what the changes next month will mean both for pension holders.
For more details on the research and pension changes, customers can visit here |
