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United Kingdom (UK) Post Retirement Pensions Market Report 2020: 9/10 Individuals State that their Lifestyle in Retirement is as Expected or Better

Research and Markets
·7-min read

Dublin, Nov. 13, 2020 (GLOBE NEWSWIRE) -- The "United Kingdom (UK) Post - Retirement Pensions Market 2020" report has been added to ResearchAndMarkets.com's offering.

This report explores trends in the way individuals fund their lifestyle in retirement. It examines pension decumulation and provides details on the way pension plans are accessed for the first time, exploring differences by pension pot size. Current and historical data on the size of common retirement income products is provided.

The report also discusses to what extent individuals are confident that their lifetime investments will last through retirement. In addition, it explores consumers' attitudes and behaviors with regards to obtaining financial advice on pensions.

Typically, retirees supplement the state pension with other sources of income, such as workplace and private pensions. Pension freedoms rules enable over 55s to access their pensions flexibly, but many are inadvertently putting their long-term savings at risk. The majority of adults will access their pension funds as soon as they can.

In fact, more than half of all pension pots are withdrawn fully when they are accessed for the first time. Unexpectedly, withdrawals from pension pots fell in the first half of 2020 despite fears that COVID-19 would prompt individuals to take more funds. As economic uncertainty continues, a rise in unemployment among older adults could push some into early retirement.

Scope

  • Nine in 10 individuals state that their lifestyle in retirement is as expected or better.

  • Income drawdowns totaled 9.3bn pound in new premiums in 2019, almost double the size of the annuities market at 4.3bn pound.

  • 91.9% of retirees are confident that their pension funds and/or savings will last their entire lifetime. This belief is broadly unchanged by the outbreak of COVID-19.

Reasons to Buy

  • Learn how individuals access their pension plans for the first time.

  • Understand the size of income drawdowns and the annuities market.

  • Explore the gender gap in state and private pensions.

  • Discover to what extent over 55s and retirees use financial advice on pensions.

  • Understand the impact of COVID-19 on the post-retirement market.

Key Topics Covered:

1. EXECUTIVE SUMMARY
1.1. Many individuals are putting their long-term savings at risk
1.2. Key findings
1.3. Critical success factors

2. RETIRING AND CLAIMING THE STATE PENSION
2.1. Most adults retire once they can access the state pension
2.1.1. The SPA has risen to 66 and there are plans to increase it further
2.1.2. Most wait until they can access the state pension before they retire
2.1.3. COVID-19 could force older individuals into early retirement
2.2. The state pension is insufficient to live comfortably on and there is a gender pay gap
2.2.1. The UK's state pension is not enough to live comfortably on
2.2.2. The gender gap has narrowed but still exists
2.2.3. COVID-19 has brought the state pension's triple-lock mechanism into the limelight
2.2.4. Some individuals saw their pension reduced following the end of the ADI
2.2.5. Single individuals need at least 10,200 per annum at retirement to cover all expenses
2.2.6. On its own, the state pension is at least 2,062.26 pounds per annum too low to enable retirees to pay all their expenses
2.3. Brexit uncertainty and COVID-19 create a dilemma for individuals planning to retire abroad
2.3.1. Individuals are having second thoughts about retiring abroad owing to Brexit and COVID-19
2.3.2. Brexit negotiations will affect UK pension eligibility

3. FUNDING RETIREMENT AND LIFESTYLE
3.1. Retirement income typically comes from several sources
3.1.1. The state pension is key to funding retirement, but personal pensions are common
3.1.2. More than half of all individuals with retirement incomes in excess of 50,000 per annum live on private/company pensions only
3.1.3. Women have lower incomes in retirement than men
3.2. Retirees have confidence that their funds will last through retirement
3.2.1. Lifestyle in retirement is as expected for the majority of individuals
3.2.2. Most retirees do not review their budget frequently
3.2.3. Individuals are confident that their pensions/savings will last through retirement
3.2.4. Confidence that pensions/savings are enough to last an entire lifetime has been broadly unaffected by COVID-19

4. TRENDS IN PENSION DECUMULATION
4.1. Retirees typically have DB pensions, but DC schemes are becoming more common
4.1.1. DB schemes are the most common type of workplace pensions among over 40s
4.2. Pension freedoms give DC scheme members flexibility in how funds are accessed
4.2.1. New plans are underway to increase the pension freedoms age to 57
4.2.2. DB to DC transfers have been common as individuals take advantage of pension freedoms
4.3. Most over 55s have sizable pension pots, but the majority will access funds as soon as they can
4.3.1. Most over 55s have sizable pension pots
4.3.2. Only a minority of individuals defer taking their pension so it pays more later, while most access their pots as soon as they can
4.4. Accessing pensions for the first time
4.4.1. Full cash withdrawal is the main way of accessing pension pots for the first time
4.4.2. Full cash withdrawals are linked to small pension pots while drawdowns are linked to larger pots
4.4.3. Most pension withdrawals are invested into savings accounts
4.5. Income drawdowns and annuity sales have stabilized
4.5.1. The impact of pension freedoms has faded
4.5.2. The value withdrawn from pensions fell in the first half of 2020 despite fears that COVID-19 would result in a possible spike
4.5.3. Annuity rates reached a historic low in September 2019

5. FINANCIAL ADVICE IN THE POST-RETIREMENT MARKET
5.1. Retirement is a common reason for seeking financial advice, yet uptake is mixed
5.1.1. Retirement is one of the main reasons prompting consumers to seek financial advice
5.1.2. Half of all pension plans are accessed without advice
5.1.3. Uptake of the Pensions Advice Allowance is low
5.1.4. Retirees are less likely to seek financial advice on pensions than other adults
5.1.5. Non-retired adults tend to engage with their advisor on pensions more often than retirees as they explore their options
5.1.6. Reputation and an existing relationship with the advisor are key considerations among over 55s seeking financial advice
5.2. Risks behind pension freedoms and lack of advice remain a concern
5.2.1. Enhanced guidance on pension drawdowns and transfers amid COVID-19
5.2.2. Early drawdowns mean pension funds could last less and limit future contributions
5.2.3. PLSA launches call to improve pension freedoms guidance
5.2.4. Previously, the FCA had introduced several remedies to improve retirement outcomes
5.3. The industry is working on improving awareness of pension income at retirement
5.3.1. The Pensions Management Institute launched Retirement Matters to provide financial education on pensions to individuals exploring their retirement options
5.3.2. The Money Advice Service released a beta income drawdown tool

6. APPENDIX

Companies Mentioned

  • Canada Life

  • Prudential

  • Standard Life

  • LV=

  • Aviva

  • Hodge Lifetime

  • JUST

  • Legal & General

  • Scottish Widows

  • Pension Wise

  • Wealth at Work

  • Money Advice Service

For more information about this report visit https://www.researchandmarkets.com/r/93ps2p

Research and Markets also offers Custom Research services providing focused, comprehensive and tailored research.

CONTACT: CONTACT: ResearchAndMarkets.com Laura Wood, Senior Press Manager press@researchandmarkets.com For E.S.T Office Hours Call 1-917-300-0470 For U.S./CAN Toll Free Call 1-800-526-8630 For GMT Office Hours Call +353-1-416-8900