4th February 2014
Nearly four in 10, or 38%, of British adults are not planning to make any investment towards their retirement over the next 12 months according to research carried out by YouGov for broker TD Direct Investing.
The study found this is in stark contrast to North American and Asian investors who are well attuned to investing in equities for when life begins to slow down, highlighting a disparity in financial forward planning techniques.
A recent Gallup poll found that, in the US, more than half at 53% of respondents plan to rely on investment in stocks and shares to fund retirement, in the form of individual stock investments or a stock mutual fund investments.
This is over three times more than in Britain, where just 15% of those surveyed say they would consider using a stocks and shares Isa for retirement – despite being tax efficient and more likely to generate positive returns compared to savings accounts or cash Isas.
Further afield in Japan, a 2013 survey from Ageon found that a third, at 33% of Japanese retirees bought a self-managed investment product in order to fund their retirement.
Stuart Welch, CEO of TD Direct Investing says: “The research shows that Britain lags behind the Americans and Japanese in planning for old age. It is striking to see such a discrepancy in pension planning, particularly when Britain is experiencing a sustained low interest rate environment with no signs of change in the short to medium term. It begs the question, what’s so unique about the British context that makes us resist the potential of higher returns for a more secure future?
“With wages falling in real terms and Governor Mark Carney advocating ‘low rates for longer’, we are calling on all Britons to consider the investment opportunities now available in the market which might help them avoid being caught out during later life.”
The study found that whilst consumers may consider stocks and shares Isas over cash Isas, as they can help generate some return in a low interest rate environment, some of the challenges people cited was a lack of understanding of and ‘too many providers or products to choose from’.