People are finding it more difficult than expected to make retirement decisions, according to research commissioned by the People’s Pension and State Street Global Advisors (SSGA).
In the report New Choices, Big Decisions: Exploring Consumer Decision Making and Behaviours under Pension Freedom and Choice, the decision-making journeys of 110 people aged 50-65 were looked at.
It found six in ten had mixed or negative emotions about the choices facing them while others were taking a long time to make a decision.
More than a fifth of people who started the process had not made a decision and were still considering their options six months later.
People’s Pension director of policy and market engagement Darren Philp said: “While savers generally welcome the new flexibilities, it is clear that they are struggling to compare options and get the right information at the right time to help them make the right decisions.
“People feel that they are being forced into making a decision, whether that is because they fear the rules will change again or whether they believe they have to because of the way that choices are presented to them. But people don’t need to rush.”
SSGA senior defined contribution (DC) strategist Alistair Byrne added: “It’s clear there is more the industry can do to help support people to make the most of their retirement savings. We need to better articulate the choices people face – including the option to leave money in the pension scheme until it is needed – and to adopt clearer and more consistent language in our communications.”
The People’s Pension and SSGA commissioned the research and it was conducted by Ignition House, a specialist research consultancy.
It ran from June 2015 to February 2016.
The ten key questions people should ask before making retirement decisions
- Do I really need to take any of my pension money now?
- Do I really need to take all 25% of my tax-free cash out now, or am I just finding ways to spend it because I can?
- For those reliant on spouse’s (DB) pension, what happens to me if they die first?
- If I am going to put my pension money into a cash ISA, am I sure that I will not be better off by leaving the money invested?
- Does my provider offer the best product or should I look around for a better deal?
- If I am not buying an annuity, what should I be invested in?
- What ongoing charges are there, and how will this impact me?
- Is property really a low-risk investment and have I thought through all the overheads involved – capital gains tax, income tax on rent, void periods, insurance, letting fees, refurbishment costs and so on?
- Will I really want to downsize when my pension money runs out – I will probably be in my late 70s by then and less open to big lifestyle changes?
- More and more people are living into their 90s, what if I am one of them?
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