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04 Feb 2015

Nearly Five Million People Could Make Poor Pension Choices Under New Reforms

New research has raised concerns about the new pension reforms due to come into force this April, revealing that 4.8 million UK savers are at risk of making poor pension decisions, HR Magazine reports.

The ‘Understanding Retirement´ report, conducted by The National Association of Pension Funds (NAPF), looked at the thoughts and concerns of people between the ages of 50 and 70 - both those who were in work, and those who had already retired.

The report states that the average 56-year-old working couple brings in £30,000 per year whilst in work, and £20,000 per year during retirement. They have little to no defined benefit pensions savings, but have a State pension and will have built up defined contribution pensions through their place of employment.

With the majority of over 50s delaying seeking financial advice about their retirement until they are very close to retiring, according to the report, they are at risk of leaving it too late.

What´s more, this ‘average couple´ makes up the largest group of 50-70 year olds still in work - some 4.8 million people. Researchers found that 61% of this group had not yet got any advice about their financial situation for retirement; while nearly half (48%) said they were comfortable making decisions on their own.

Commenting on the findings, and with the reforms drawing ever closer, the NAPF´s director of external affairs Graham Vidler expressed his concern that there was still “a great deal of uncertainty about what people should do”.

For the reforms to give savers a real opportunity get the most out of their pension savings, Vidler argues that savers need three things: “awareness and understanding of the guidance they can expect, outline pathways to help them make the best use of their money throughout their retirement, and products that are easy to understand, reliable and good value.”

Copyright M2 Bespoke 2015.

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