Pension guidance ‘opt in’ should be replaced with an ‘opt out’ system according to Just Group, as new research shows a widespread lack of pension knowledge among those approaching retirement.
New figures from the ONS Wealth & Assets Survey revealed just over half (55%) of 55-64 year olds felt they understood enough about pensions to make decisions about saving for retirement, while 29% said they did not have enough knowledge and 16% were unsure. The figures equate to nearly two million people lacking confidence, Just Group said.
Meanwhile, less than half (49%) of 45-54 year olds said their understanding of pensions was sufficient to make retirement decisions, while a third (34%) felt they lacked knowledge and 17% were unsure.
Stephen Lowe, group communications director, Just Group, said: “There is a real opportunity for advice firms to reach out to a wider range of customers. By their own admission people recognise they lack understanding of the complex decisions faced when making financial plans for retirement.
“Pension freedom and choice can only work if people are equipped to make informed decisions. The latest figures show that 60% of those aged 55-64 have not thought about how many years of retirement they need to fund, which is a fundamental decision when deciding how to use your retirement savings.
“Advisers help their clients deal with these challenges day in and day out but there are many more people who don’t know where to start and would benefit from advisers’ expertise.”
According to Just Group, replacing pension guidance ‘opt in’ with an ‘opt out’ option would encourage more people to access free and impartial guidance from Pension Wise.
Lowe added: “From an adviser’s perspective, it’s worth noting that savers who have used Pension Wise are more likely to go on to contact an adviser, tax advisor or accountant than those who have not. Ensuring people approaching retirement receive independent, free and impartial guidance will build financial understanding among pre-retirees and benefit the wider advice community.”
