New research raises questions on whether those working beyond retirement are getting adequate advice on their pension and investment options.
The research conducted among independent financial advisers, found that almost a quarter (23 per cent) advise clients who are working but have accessed their pension savings, to move away from equities and other volatile assets.
However, this research, by LV=, also found that almost half (44 per cent) of advisers recommend that these ‘working retirees’ make no change to the risk profile of their investments.
Nearly one in five (19 per cent) of advisers surveyed said these ‘working retirees’ are still chasing growth and exposing their pension to volatility.
A similar proportion said that clients who continue to work are doing so as a result of what they now feel to be overly cautious investment decisions made early in their working lives.
This may explain why more than one in three of these advisers (36 per cent) say these clients have their remaining pension funds invested in assets with a greater element of risk than those who have given up work altogether.
This research comes as the FCA is set to introduce new rules on ‘retirement pathways’ designed to give more guidance to drawdown customers who don’t take advice on their investment options.
These new default pathways will be introduced next year after concerns that too many people were keeping assets in cash, potentially reducing long-term returns.
However being over-exposed to volatile assets can also cause problems particularly for those taking regular income in a market downturn.
LV= managing director of savings and retirement Clive Bolton says: “For anyone approaching retirement or anyone recently retired, with pension assets that remain invested, the prospect of market volatility is likely to be a worrying one.
“In particular, the group often known as the mass affluent – those with between £100,000 and £500,000 in retirement savings, have potentially the most to lose by being overly exposed to volatile assets.
“Anyone following a riskier investment strategy in search of growth at a late stage of saving for their retirement could find that any volatility means they will either need to work for longer than they planned or have to live with a dent to their savings pot and the income it can provide them.”