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However, 92% aren’t on track for retirement they want and fraud risk looms large, as one in five receive illegal cold calls.
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One in five (20%) people have decided to save more into their pension as a direct result of the pension freedoms
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However, one in five (19%) have received cold calls offering a free pension review or pension investment opportunities
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The UK’s average Readiness score has risen from 47 to 49 since May 2015
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While people remain unrealistic, the gap between the income people want in retirement and the actual income they are on track for has narrowed by £2,100
Aegon’s fourth UK Readiness Report, the latest in a series of reports that looks at attitudes toward retirement, finds that the pension freedoms introduced in April are having a positive influence on the UK’s financial behavior. In the last six months 22% of people have checked the performance of their retirement savings, and a fifth (20%) have taken steps to review or affect their plans for retirement, up from 19% and 18% in May 2015. For those already saving into a pension this rises to 29% and 26% respectively.
As a consequence, the nation’s readiness score has risen from 47 to 49 in the last six months. The UK still hopes to retire aged 63, despite planned increases to the state pension age. Since May 2015, there has been an increase in the income people want in retirement to £43,000, a sum that would require a savings pot of more than £1m, higher than the new pension lifetime allowance. While people remain unrealistic, the gap between the UK’s desired and likely retirement income [£14,500] has actually narrowed by £2,100 over the past six months.
Dangers of fraud
While pension freedoms have bought about improvements to the UK’s readiness for retirement, fears that the reforms have also opened the door for fraudsters are being vindicated. 19% of people in the UK have received a cold call offering a free pension review or pension investment opportunity, 15% have received an offer suggesting they can access their pension pot before 55, and 11% have received a text message offering a free pension review or pension investment opportunity. These are worryingly high numbers, especially as a quarter (25%) of the UK public are not aware that the reforms increase the likelihood of pension scams.
Mark Till, Managing Director, Aegon UK Direct said: “While an additional 400,000 people are on track for the retirement they want, 92% are still falling short of their retirement targets. This is a small improvement but we’re optimistic the pension freedoms have reignited people’s interest in their pension and that we should see greater engagement in the years to come.
“The pension freedoms have focused primarily on giving those approaching retirement more control over their savings, something that we wholeheartedly support. However, whilst we are seeing initial steps in the right direction, it is vital that we continue to support those starting out or still on their savings journey.
“Industry reforms such as auto-enrolment and pension freedoms are working, and they are already having a positive effect on saving behaviours, with more people engaged, and ready for the retirement they want.
“Prior to the freedoms the industry braced itself for a rise in sophisticated scams and sadly, the fears have not been misplaced. It’s alarming to see that almost 8 million people in the UK have received a cold call offering a free pension review or pension investment opportunity. With this number of people contacted more financial education and awareness is vital. Government and the pensions industry need to take collective responsibility to ensure the UK public are adequately protected.
“The way forward for the government and industry alike is digital engagement. We now have a number of online tools, like Aegon’s own Retiready, that could, and should help people across a range of age groups engage with their pension savings in an effective way, and continue to support the UK in getting ready for the retirement.
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