10th December 2015
Changes to legislation impacting pensions, savings and investments have derailed UK consumers’ financial aspirations, creating a culture of apathy towards financial planning, new research by Towry claims.
The wealth manager’s survey of 2,000 people earning more than £30,000 revealed that over half, at 52%, felt that continued reforms of the pension system make it trickier to plan effectively for retirement, while 30% stated that the reforms had left them less confident in their retirement plans.
Nearly a third, at 31%, said they were not saving as much for retirement as they could because of fears about further changes to the pension system, thus exacerbating the growing deficit between what people require in retirement versus their projected pension pot based on current savings. In addition, just 56% of respondents said they fully understood the implications of recent and ongoing pension reforms.
However a staggering 40% said they do not currently have a long term financial plan, with one in five admitting they “wouldn’t know where to start”, highlighting a significant knowledge gap amongst UK savers. Supporting this conclusion, a further 10% who have never had a financial plan attributed this to “never having access to the right advice”.
Perhaps more worryingly, the survey highlighted a high degree of apathy towards long term financial planning with 25% admitting they have “never considered it important”.
Andy James, head of retirement planning at Towry, said, “These figures clearly highlight a lack of financial education in UK, a situation made all the more serious by the recent reforms to pensions legislation.
“Whilst in principle these changes are welcomed and provide savers with greater freedoms, it’s clear that more choice is only a good thing when it is well informed. However, constant tinkering with the rules does little to instil confidence in those starting to save for retirement that they’ll be treated the same way in later life, leading to greater uncertainty and a reluctance to commit their hard earned cash.
“What is needed now is a prolonged period of stability, to allow savers to build their understanding of how the new framework impacts them. Only then can we start to address the culture of apathy that has developed and start to re-engage the nation on the importance of financial planning.”