The pension freedoms launched in April this year have given us all a wealth of options when it comes to planning our retirement income. But it seems that this increase in choice is making more and more of us dependent upon others to steer us in the right direction, and employers are likely to feel the pressure.
According to Baring Asset Management's annual survey, 13% of respondents declared that they were relying on advice from their employer to tackle their retirement planning. This is a survey record, up from 9% last year and 3% in 2013. Respondents also said that they were increasingly turning to their employers to explain their pension asset allocation – 14% of those questioned admitted this in the latest survey, compared with 13% in 2014. Employers are therefore very likely to find that they have a growing responsibility to guide their employees through the retirement planning process.
Worryingly, the survey also found that more and more people are turning to informal routes of advice, with younger workers being especially likely to seek guidance from less established sources.
The survey revealed that 23% of respondents would primarily rely upon friends and family for advice about their pension, a sharp rise from the 16% who said the same last year. Those aged 18-24 were particularly likely to rely upon their close friends and family for guidance, with 40% of this age group saying that they would favour this advice route compared with just 9% of 55-64 year-olds. Younger workers were also more likely to lean on their employers for pension help, with 17% of these respondents saying that they would seek employer guidance compared with just 8% of those aged 55 to 64.
However, the survey also noted the positive finding that financial advisers remain the most significant source of advice: 27% of respondents cited this as their main supplier of advice, a welcome increase from 26% in 2014. Nevertheless, more needs to be done to encourage more workers to use formal advice to get their pension plans into the best possible shape.
Planning ahead for retirement is the best way to secure that all-important income for your post-work years, but how can you maximise it? Well, the best thing to do is to seek independent financial advice. A financial adviser can assess your risk averseness and your income needs and help you form a concrete plan. If you are unsure who to turn to, it may be a good idea to speak to Pension Wise first: this free Government service can guide you through your options and help you to identify the next steps in the retirement planning process.
Of course, another all-important thing to do is save! Putting money into your workplace pension is a great way to start building up a pension pot – not only will you benefit from tax-free savings, but your employer will also pay money into your pension.
If auto-enrolment hasn't reached you quite yet, get saving anyway! If you want to build a pension nest, saving into a regular savings account or a cash ISA can be ideal. Opt for deals that allow further additions, as this way you can continue to add to the fund when you can. If you are happy to take on more risk, you may also want to look into a stocks & shares ISA – these accounts carry more risk, but they also have the potential to give you better returns. Just make sure you weigh up the risks carefully before you invest and, ideally, seek independent advice beforehand.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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