UK savers are far less likely to seek advice or guidance on their retirement options when compared to those in other countries, according to new research.
State Street Global Advisors’ ‘Retirement Reality Report’ revealed a challenging picture in the UK, with the majority of DC savers pessimistic about their retirement prospects.
The report found that ‘retirement confidence’ has increased marginally on their previous global report, but this is from a very low base. Overall only one in five savers (20 per cent) are confident they will be financially prepared for retirement by the time they plan to stop working. This has increased from 6 per cent in 2023.
But despite this rise, over half (52 per cent) of UK savers are not optimistic they will be prepared for retirement financially, and 50 per cent were not confident they would be able to retire when planned. Around 30 per cent said their outlook on when and how they might retire has changed, with the top three factors cited for this being inflation, and the economy and broader political climate.
The research also highlighted that UK savers remain confused about how much they need to save, and worried they will not be able to generate a consistent income throughout retirement. More than six out of 10 said these were issues, with more than one in two (55 per cent) saying they were worried they would outlive their savings.
But despite these concerns, UK savers were less likely to work with an independent or employer sponsored financial adviser when compared to savers in other countries.
Only 21 per cent work with an IFA, compared to 28 per cent of savers in Australia, Ireland (36 per cent), Canada (27 per cent) and in the US (38 per cent).
As a result 42 per cent said they don’t know what they plan to do with their retirement savings when they retire. This is a much higher figure than those in the US (22 per cent), Ireland (24 per cent), Australia (27 per cent) and Canada (35 per cent). High fees were cited as one of the most common reasons for not seeking advice.
The report also looked at how savers would like their pension funds to be invested. A total of 65 per cent said that want retirement savings invested in a way that maximises returns – regardless of where it is invested.
However this is not universal. Just under a third of respondents said they would like their retirement savings to be invested in their local area. A similar proportion (30 per cent) said they would like their retirement savings invested partially in the UK economy to boost economic activity – even it if means lower overall returns.
State Street Global Advisors head of retirement strategy Alistair Byrne, says:“These findings present a mixed picture. It’s clear that some of the challenging dynamics in the UK retirement landscape persist.
“The majority of UK savers do not feel confident about their retirement, and that there is a clear lack of understanding on how much is needed to live their desired lifestyle. As the needs of pension savers evolve, the support, education and structure of the UK’s retirement system must continue to evolve too — otherwise, we risk a generation of workers being left behind.”
“With that said, there are some positives in the research. Increasingly, pension savers are conscious of how their funds work for them and how they’re invested by managers – for example, we see support from many UK savers for their money to be invested locally, a specific provision of the government’s Pension Investment Review. Work is underway to ensure that the UK’s retirement system supports hard-working savers through to retirement, and it’s vital that these needs are heard and prioritised.”
