Many retirees are struggling with understanding the best approach for their pension income, new research from GBST has shown.
The research carried out among financial advisers found 44% rank difficulty in deciding whether to opt for drawdown, guaranteed income or a blended approach as either the first or second biggest pensions-related issue facing people at retirement.
The report, ‘Managing the retirement income challenge: A global perspective’, examines the drivers of change in the global retirement landscape, with a particular focus on Australia and the UK.
According to GBST, a recurring theme among advisers and industry experts is a lack of ‘retirement literacy’ in both the UK and Australia. While many consumers are adept at managing their day-to-day finances, they often feel unprepared when it comes to making appropriate choices with the long-term savings to generate an income that will last throughout retirement.
Robert DeDominicis, CEO of GBST, said: “Delivering a sustainable income that lasts throughout later life is one of the most important functions of retirement savings. Yet 30 years after the introduction of the Superannuation Guarantee in Australia and 20 years since the launch of auto-enrolment in the UK, our report finds that a significant number of people are still struggling with saving enough during their working lives and managing their funds once they retire, leaving many relying heavily on state pension provision as they age. With rising life expectancies and an ageing population, the retirement income challenge is not going away.”
DeDominicis said that while successive governments in both Australia and the UK have attempted to address the issue with regulatory change, actual progress has been slow.
He called for greater engagement with pensions and improved ‘retirement literacy’ to help people make better financial decisions and achieve better financial outcomes.
He added: “We believe technology forms the final piece of the puzzle, with innovation in systems, tools and products that offer flexibility and choice for people to use their pension savings in a way that suits their needs, while also ensuring they enjoy a comfortable lifestyle in retirement. Solving the retirement income challenge will require a significant combined effort. But the prize will be improving financial resilience among older generations without increasing the burden on future generations.”
