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Press comment: IFS report on retirement expectations, attitudes and savings behaviour

05/03/2020

If you are covering the Institute for Fiscal Studies (IFS) report on retirement expectations, attitudes and savings behaviour, please see the following comment from Ian Browne, pensions expert at Quilter:

Ian Browne“Nearly a decade on from the biggest shake-up of pensions this country has witnessed, there continues to be positive signs that the nation is on the right path towards adequately saving for life after work. The proportion of individuals who are confident that their income in retirement will provide the standard of living they hope for has increased from 42% in 2008 to 53% in 2017 and there has been a sharp increase in the proportion of private sector employees expecting to receive a private pension in retirement, increasing from 63% in 2013 to 73% in 2017.

“However, among the self-employed, there has been a material decline in the proportion expecting to receive any income in retirement from a private pension, reducing from 57% in 2006 to 43% in 2017. This mirrors the decline in pension membership by the self-employed, emphasising the fact that that those outside the scope of workplace auto-enrolment are falling behind when it comes to retirement saving. With increased numbers becoming self-employed year-on-year, and with the increased use of “gig” economy-style employment practices, we could be witnessing a self-employed pension car crash in slow motion. 

“It is clear that there is a long way to go. A considerable number of people are still unsure whether their income will provide them with the standard of living they aspire to in retirement and the report suggests that people around the age of 50 still do not have a clear understanding of when they are going to retire, with only a ballpark age and figure in mind.

“There is a real danger that people are sleepwalking into retirement without the necessary retirement provisions. Setting clear goals and financial targets are vitally important for good retirement planning and people must start thinking as early as possible about the age at which they want to retire. The changes to the rules on pension ‘wake-up’ packs should go some way in getting people ready for retirement, but it is still too early to tell and by the age of 50 it may already be too late.

“The report demonstrates that Automatic Enrolment (AE) has had a substantial effect on pension provisioning amongst the young, with 88% of 22 to 25 year-olds participating in a workplace pension compared with only 20% before the introduction of AE. This provides even more evidence that the government’s policy is working well and comes on-top of the recent Automatic Enrolment evaluation report, which found that despite the increase in minimum contribution rates, there has only been a moderate increase in those who have decided to stop contributing to their pensions.

“There was always a danger that as employees see a greater proportion of their money go out of their pay at the end of each month, they will not be able to resist the temptation of taking the income today and stop contributing to their pensions. With opt-out rates increasing only marginally from 0.72% in 2018/19 to 0.76% in the first quarter of the 2019/20 financial year, this has not been the case and employees have resisted the temptation.“

For more information contact

James Ventress020 7002 402507884 753012james.ventress@quilter.com

Notes to Editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £95.3 billion in customer investments (as at 31 March 2020).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.

The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.

Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

Wealth Platforms includes Old Mutual Wealth UK platform and Quilter International, including AAM Advisory in Singapore.

The Old Mutual Wealth Heritage life assurance business was acquired by ReAssure Group Plc on 2 January 2020.

Since its IPO in June 2018, Quilter plc’s businesses have progressively rebranded to Quilter, as follows: 

  • Quilter Financial Planning (previously Intrinsic)
  • Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
  • Quilter Financial Advisers (previously Charles Derby Group)
  • Quilter Financial Adviser School
  • Quilter Cheviot
  • Quilter Investors
  • Old Mutual Wealth (becoming Quilter Investment Platform)
  • Quilter International (previously Old Mutual International)

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.