As Financial Planners, working with clients over many years and helping them plan towards a happier, more secure and comfortable life in retirement is one of the most rewarding aspects of our work.
One of the main reasons that clients seek our advice, is to do with retirement planning, getting a grip on their pension savings and working out the sort of lifestyle they can afford once they stop earning.
With this in mind the ignorance about pensions among the general population is little short of extraordinary and is deeply concerning. It was highlighted this week in a major survey of 2,000 consumers carried out in January by the Pensions and Lifetime Savings Association (PLSA.)
56% of workers concerned about retirement savings
One of the key findings was that huge numbers of people have no idea how much they actually have saved for retirement.
Ask people how much they owe on their mortgage or what interest rate they are paying and they can probably tell you. Ask them how much they owe on their credit card and they can probably give you a good idea. Ask them how much is in their current account and…well you get the idea.
Ask them how much exactly is in their pension pot or pots and, well, the response will likely be utter bafflement.
The PLSA survey found more than half of workers (54%) were in the dark about the size of their pension pots. Some 60% of women and 49% of men could not state with some certainty how much they had saved to keep themselves in comfort in the final 20 or 30 years of their lives.
Younger workers were more likely to be ignorant but even 48% of those aged 55+ said that they did not know the amounts they had saved.
But we can’t blame pension savers for this ignorance. We blame the pension providers for failing to give their customers clarity about how much they have saved. Many struggle to understand their pension statements because of a lack of clarity.
We should be able to say “I have £XX saved in my pension pots and when I retire at 65 I will get a pension of £XX a month after tax.”
It should be that simple but sadly, pension statements are too complex, leading to an astonishing number of people very ill prepared for what should be one of the most fulfilling times of their lives.
If you or anyone you know is baffled about your pension situation and whether you will be able to afford the lifestyle you want in retirement, please do get in touch. We will help you to understand the jargon and put you in a much stronger position to enjoy your later years.