As a result of the pension freedoms: 34 percent of all respondents will think about planning for retirement sooner.
This rises to 40 percent among younger people (22-30). Hargreaves Lansdown comment: The new freedoms have reinvigorated interest in retirement planning. We wouldn’t go so far as to say pensions are sexy now but they’ve certainly become more attractive. The following table summarises NEST’s findings on investors’ retirement intentions:
Hargreaves Lansdown comment: Many investors will want more than one retirement income solution; annuities are still popular and a small but significant minority are going to just take the cash and run. Whilst only 16 percent want only a guaranteed income (eg an annuity), 48 percent want at least some guaranteed income; similarly just 19 percent want only an invested pension income (eg income drawdown) however 43 percent want some of their income to come from an investment fund. 20 percent have indicated that they will take some (13 percent) or all (7 percent) of their pension pot as a cash payment.
Auto enrolment continues to enjoy strong support, with NEST reporting 77 percent saying it is a good idea, compared to 68 percent in 2013 and 63 percent in 2011. Hargreaves Lansdown comment: Auto enrolment has now delivered over 5 million new pension savers, compared to 2012. This is a fantastic achievement, however millions more are still not saving for retirement and many of those who are now scheme members are not saving enough for retirement; there is still a long way to go. 35 percent of employers using NEST reported that other providers were not willing to take all their employees.
Hargreaves Lansdown comment: It is understandable that some pension providers want to pick and choose which employers they do business with. This illustrates the importance for employers to plan ahead and to use a corporate pensions adviser if they are in any doubt as to how best to meet their statutory obligations. 66 percent of employers using NEST say that a workplace pension is an important part of the benefits package.
This reflects Hargreaves Lansdown’s own research which now shows that employers’ principal concern regarding pensions is whether their employees will be able to afford to retire. It is also notable that the 66 percent figure implies 34 percent of employers do not regard a pension as important yet they are obliged to pay money into it. Effectively these employers believe their money is wasted. They might be better served by communicating to their employees the valuable benefits of pension participation and the employer contributions.