FINANCIAL ADVISERS URGED TO ADVISE ON PENSIONS AND SAVING FOR RETIREMENT

Zurich is urging advisers to review their clients’ retirement portfolios in light of people delaying their retirement, or considering going back to work – a term dubbed ‘returnment’. This emerging trend, described by independent think tank the Future Laboratory, was first unveiled at the recent Zurich credit crunch conference and describes the changing nature of retirement in the UK.

New research from Zurich reveals that over a third of people (38%) over the state retirement age have carried on working or returned to work.  Zurich’s survey also examines the role played by financial advisers providing advice for clients over retirement age and some of the reasons behind this emerging trend of returnment. The online poll carried out earlier this year asked advisers to share their clients’ current experiences of retirement. Over a third of clients (36%) stated they carried on working because they simply couldn’t afford to retire. 

As well as financial reasons it seems there are other reasons for continuing to work.  A quarter of clients (25%) wanted to stay active and alert whilst nearly a fifth (19%) were bored in retirement.  A further 15% felt the urge to still make a contribution to working life.     

Dave Lowe, pensions management director, Zurich UK Life, commented:  “As life expectancy continues to rise and the amount of time people spend in retirement increases, we are urging advisers to review their clients’ retirement planning.  With more and more people expecting to be active in retirement, the need for financial advice has never been greater.” 

The survey also showed regional differences between clients choosing to carry on working post retirement.  In the North East, advisers reported that half (50%) of their clients had returned to work, whilst less than a third of clients (30%) of those based in the South West were returnees.   As a nation, the Welsh are more likely to go back to work, with nearly half of clients (48%), returning to work compared to three out of ten Scots (31%) and a fifth of those from Northern Ireland (21%).   

Zurich’s research sought advisers’ views on how their clients are choosing to work beyond retirement age. Nearly four out of ten people (38%) have carried on working without actually retiring whilst a third of people (33%) have moved to a part time role with a further 14% becoming self employed as a consultant or similar.  Interestingly, the survey reveals that a growing number of people are choosing to return to work after they have retired (10%) with many setting up their own businesses (five per cent).       

Worryingly, despite this changing lifestyle, the research reveals that a fifth (20%) of financial advisers have not taken the opportunity to review their clients’ retirement planning as a result of clients returning to work in retirement.

Of those surveyed that have reviewed their clients’ retirement planning nearly four out of ten advisers (39%) have advised their clients to just take their tax free cash.  More than a fifth (22%) advised their clients to take the income as well as the tax free cash, and more than a third (37%) recommend leaving any pension invested. 

Lowe concluded: “As more and more people are re-evaluating how they spend their retirement, advisers have an important role to play in helping people plan for their retirement.  We believe that advisers have a responsibility to make people aware of the different ways of funding their retirement, such as income drawdown, as well as the taking the traditional annuity option.

We need financial advisers to review their clients’ pension arrangements in light of changing lifestyles as more people are active in retirement.  By helping people take the right steps in their younger years, we believe people will be better placed to make the most of their accumulated wealth in retirement. 

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