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St. James’s Place study finds adults ignorant of pension changes

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Research carried out on behalf of St. James’s Place by The Wisdom Council reveals that only 49 per cent of UK adults understood the pension changes implemented in 2015 and the impact on their choices at retirement.  Moreover, over 40 per cent of respondents remain confused about the way pension cash withdrawals are taxed. 

Participants in the study were often confused about what their options were, the age at which they could access benefits, and even how much their pension was worth. The firm writes that for those looking for help and information, the government’s free Pension Wise service is arguably a good starting point. But general guidance provided by government should not be seen as a replacement for face-to-face financial advice.
 
Ian Price, Divisional Director at St. James’s Place, says: “Regardless of whether financial advice had already been taken, almost all respondents (94 per cent) consider it to be at least ‘quite important’ before or at retirement, and more than half (52 per cent) think a financial adviser would be their first stop for pension advice. The research also revealed those who take advice are more confident of their retirement, those that don’t more fearful.
 
“Those approaching retirement often talked about the ‘fear’ of stopping work and the importance of having ‘something to do’ to keep them mentally and physically active.  Almost half of respondents (47 per cent) plan to reduce their hours and take a glide path into retirement; in other words they do not see retirement as beginning at a specific point in time.
 
“This so-called ‘grey glide’ has been observed in other research, but the extent to which it was revealed in this study was particularly striking. Perhaps unsurprisingly, individuals exhibiting a high level of financial sophistication are more than twice as likely to be interested in their pension, have a greater propensity to seek financial advice, and also expect to retire earlier with a higher annual income.
 
“However, more than half of the less financially sophisticated group claim little or no interest in the topic of pensions and retirement. That lack of interest leads to a lack of knowledge and to insufficient planning, which risks undermining their confidence in the future.”

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