There is no longer a single solution to later life income and people will need to consider a layered retirement plan which uses a combination of annuities, drawdown and the State Pension. Even housing wealth should be considered. Britain’s over-55s will own £1.8 trillion of housing wealth and that figure is set to double by 2036.[1] This equity could be unlocked to help thousands fund their retirement.
As an industry we need to make retirement planning more accessible and relatable to customers. This means delivering tailored advice throughout retirement which is based on life goals and not just product packs. This will enable more retirees to make informed decisions in later life and to enjoy the colourful retirement they want.”
Steven Cameron, Pensions Director at Aegon, on the latest ONS Pensions Wealth data: “The latest wealth figures from the ONS show just how significant private pensions whether in workplace schemes or individual arrangements are to the nation’s wealth. With a value of a huge £6.2 trillion, up from £3.6 trillion ten years ago, and now representing 42% of the nation’s overall wealth, it shows just how important private pensions are to us all.
“A further positive trend shows the percentage of adults below state pension age actively contributing has increased from 43% to 53% over the last 10 years, boosted significantly by automatic enrolment, introduced for employees in 2012. That still leaves 47% or almost half of adults not contributing which is why any future Government needs to focus on more pensions support for the self-employed and lower earners, who are both outside of auto-enrolment.
“However, there are big differences in where this wealth sits. Almost half (48%) is held in pensions which are already in payment, which will be mainly made up of people who have already retired. Many of today’s retirees will be benefitting from the golden age of generous defined benefit pensions which are very rarely available to today’s workers, particularly in the private sector.
“The figures also demonstrate a continued gender pensions gap. More men than women below state pension age have an active private pension (56% compared to 51%) and the male average (median) pot is £25,300 compared to £20,000 for women. However, there are signs of the gap reducing as for those over age 65, the average pension wealth for men is double that for women.
“Overall, these figures confirm that private pensions are becoming even more vitally important to the wealth of the nation and each and every one of us should be taking a keen interest in this aspect of our wealth.”
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