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Pensions revolution

Happy couple sat on a large pretty doorstep
Awareness and understanding amongst the public still remains low

6 April 2017 marked the anniversary of both the new State Pension and the new pension freedoms. These major overhauls have revolutionised the UK pensions landscape, but research from Aviva[1] suggests work to improve pension saving is far from done as awareness and understanding amongst the public still remains low. In particular, millions of young people under the age of 35 are still oblivious to the changes that will shape their retirement futures more than any other generation before them.

Financial pressures

The financial pressures facing the young are well documented – including soaring house prices, lack of job security (with a job for life becoming a thing of the past), the burden of student debt and the decline of generous final salary workplace pensions.

When it comes to retirement, the young have time on their side to plan and prepare. However, the research shows that confidence and awareness in the recent pension changes amongst the younger generation is weak.

Current legislation

When it comes to their retirement age, current legislation says the State Pension age for those under 35 will be 68, yet the research finds that two thirds (65%) of this population believe they will receive it before this age. This equates to nine million young people expecting a State Pension before they will receive it.

The Cridland Review[2] proposed a further acceleration in the State Pension age, which could mean that more people will be unclear on when they can retire if understanding is not improved.

More options

The new pension freedoms were introduced in April 2015 and were designed to give private pension savers more options in what they can do with their money from age 55. But half of under-35s (50%) claim they know nothing about the pension freedoms. That is the equivalent of nearly seven million people.

Encouragingly, when the freedoms are explained to the under-35s, more than two in three (70%) believe the changes make saving into a pension a more attractive option.

Longer lives

We’re living longer but not saving enough for our longer lives in retirement. The UK is not blind to this problem and has spent a huge amount of time, money and effort modernising the country’s pension system over recent years. However, this research finds we are still to get the full benefit of this investment, especially amongst the young.

Time to talk to Reeves Financial?

For more information, please contact Reeves Financial on 01403 333145 or email areeves@reevesfinancial.co.uk – we look forward to hearing from you.

Source data:

[1] Methodology: Research conducted through Censuswide with 1,316 consumers aged 20–55. Survey completed between 29–31 March 2017

[2] Cridland Review of the State Pension Age: www.gov.uk/government/publications/state-pension-age-independent-review-final-report

A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.

This is for your general information and use only and is not intended to address your particular requirements. The content should not be relied upon in its entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. For Reeves Financial, published by Goldmine Media Limited, Basepoint Innovation Centre, 110 Butterfield, Great Marlings, Luton, Bedfordshire LU2 8DL Content copyright protected by Goldmine Media Limited 2017. Unauthorised duplication or distribution is strictly forbidden.

Adam Reeves

Author: Adam Reeves

DipPFS Cert CII (MP&ER)
Independent Financial Planner, Wealth Manager, Director

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