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FCA report shows all-round confusion about retirement options 25 October 2017
‘ Understanding the financial lives of UK adults ’, a report by the Financial Conduct Authority, highlights how uninformed and baffling many consumers find pensions.
Professional Adviser has provided some of the key findings in relation to pensions:
The report found 3% of all UK adults did not know if they had a private pension provision or not, and of those aged over 50 without a pension, 10% had never considered why they did not have one.
The report also found some six million people, or 13% of UK adults, were unsure if they were contributing to a defined benefit (DB) or a defined contribution (DC) scheme. Of those with a DC scheme, more than a third (36%) were either unable or unwilling to say how much money it contained.
Almost a fifth (17%) were unaware of DC charges, and 15% had never thought about the contribution levels needed to maintain a reasonable standard of living when they come to retire.
Meanwhile a minority (4%) admitted they had received and read an annual statement on their DC pension, but did not understand it, and more than a tenth (12%) did not know how much they were contributing.
Alarmingly, some 900,000 people who had accessed a DC pension in the last two years said they did not understand access options "very well".
Further information
Full article from Professional Adviser FCA report ‘ Understanding the financial lives of UK adults ’
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UK employers behind in proportion of pension contributions 26 October 2017
A study of defined contribution provision reveals that while UK employers will offer on average 37.5% of the 8% total minimum contributions from 2019, under automatic enrolment, this is considerably lower than those provided to employees across the globe. An international comparison of employer and employee contributions to Defined Contribution pensions was conducted by the Pensions Policy Institute (PPI), commissioned by NOW: Pensions. The report explores different factors related to, and country experiences of, employer/employee contribution balances. Professional Pensions reports that study found Italian employers would offer 84.8% of the minimum contributions from 2019 - 47.3 percentage points higher than the burden UK employers would bear. This compared to 66.7% for Denmark, and exactly 50% for Japan.
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