Pensions and savings: Interactive Investor expert gives her advice
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Pension and retirement decisions can be major life milestones as people prepare to transition out of the workforce. However, the matter can often be complex, and could easily spiral out of control.
This is an issue which needs to be tackled imminently according to savings and retirement business Phoenix Group.
Their research, entitled A Guiding Hand, in partnership with cross party think-tank the Social Market Foundation (SMF), observed a huge savings chasm amongst those aged 50 to 64.
On average, people approaching retirement age are almost £250,000 short of the pension pot they need to deliver the income they want in later life.
In this age group, the typical individual has pension savings that are 58 percent short of what they actually require.
In total, this adds up to a total annual savings gap of £132billion across the country for those reaching retirement age.
A clear majority of individuals are not receiving advice or guidance on how to build up and use their pension.
The report has suggested this leaves many Britons confused, anxious and at risk of missing out in later life.
Andy Curran, CEO Savings and Retirement at Phoenix Group, spoke exclusively to Express.co.uk about the report’s findings.
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He said: “The current environment means that the vast majority of 50 to 64 year olds in the UK will be making key decisions about their financial futures without the level of guidance or advice they need.
“Of the 13million in this age bracket, more than a third are customers of Phoenix Group.
“We want to ensure more is done to help not just out customers, but all the 13million people who need more support.
“This is why we are calling for a Government-led working group to be set up to work across our industry and regulators to help bridge the guidance gap and do more to help the people who are trying to save.”
Mr Curran highlighted the guidance gap is unfortunately not a new problem, however, one which needs to be tackled.
He added: “What is new is the urgency and scale of the challenge and the greater freedom we have to solve it post-Brexit.
“We all have a responsibility to do our best to help people who are trying to save, and we need to take action now.”
The Government currently offers the Pension Wise service, free and impartial guidance to help people make decisions about their retirement options.
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However, the report asserted lack of awareness is an issue as only 47 percent of those in the 50-64 age group who were asked had heard of the service.
The Social Market Foundation has therefore recommended an expansion of Pension Wise, in addition to new digital tools to assist access.
It has also called for using guidance or advice before accessing a pension to be made the default.
Finally, the Government has been asked to create a nationwide pension awareness campaign to push the message that people need to prepare more amply for their retirement.
A DWP spokesperson told Express.co.uk: “The Government is committed to ensuring people have the support and information they need to make informed choices about their financial futures and provides free and impartial guidance via Pension Wise and Money Helper. In addition, we’re making receiving guidance a normal part of the process when savers seek to access their defined contribution occupational pension.
“Alongside the industry, we’re investing in simpler statements and pensions dashboards to help make it easier for people to access and make sense of their pensions information to support their retirement planning.”
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