Advisers bemoan retirement options naivety

The vast majority of advisers are concerned people are saving “too little too late” for their retirement, research suggests.

According to a study by Axa Winterthur Wealth Management, 79% of advisers believe people do not address their retirement income options early enough.

The survey of 636 advisers also found 21% believe their clients do not have a firm understanding of the risks or possible rewards of investment.

Elsewhere, 14% believe consumers are being overly cautious early in their saving years while 12% say people remain excessively fearful of equities.

"There is a definite need to encourage a savings culture within the UK, but it is difficult when the goalposts keep moving," Axa Winterthur head of pensions development Mike Morrison says.

"So, post A-Day, with the introduction of the annual allowance, I am sure there were many people who planned decent sized pension contributions say in the last ten years before retirement.

"These plans will have been affected by the HMRC rules on anti-forestalling which now in most circumstance only allow a contribution of just £20,000 to get full tax relief even though their income will be taxed at 40%."

Axa Winterthur says considering people may spend up to 30 years in retirement, funding that period of time can be costly.

It says the current state pension, depending on personal circumstance, is £95.25 a week for a single person and £152.30 a week for a couple.

It adds for many people, funding their own pension pot is the only way some people will have enough money to live on. Even so, a pension fund of £100,000 only produces an annual income of just over £5,000 over a 20 year period.

"People need to be able to look ahead and plan effectively with certainty," Morrison says. "I don't think a lot of people realise just how long their retirement can last.

"We are all living longer, and most of us would like to at least maintain our current lifestyle. The only way to do that is to start saving and keep saving."