Education on pension options needed: MGM
Craig Fazzini-Jones, executive director of MGM Advantage, said more needed to be done to prevent the already large retirement income gap from widening further.
He said this could partly be achieved if more people were encouraged to shop around for the best annuity through the open market option and through better financial education.
The statement came on the back of the company’s Our Retirement Nation report, which exposed a generation of savers who know shockingly little about pensions and worry that they will not have enough money to live on when they retire.
According to the report, just 29 per cent of people over the age of 55 know exactly what an annuity is and 31 per cent of pensioners have not heard of the open market option.
This is a troubling statistic when the difference in the income paid between the top and bottom quartile conventional annuity rates is 14 per cent for men and 18 per cent for women.
Mr Fazzini-Jones said: “More needs to be done to understand the different life stages and changing needs of individuals who have retired so that adequate emotional, health and financial support can be offered. The financial services industry, government and media all have a role to play in achieving this.”
Almost one-third of retired people in the survey said they felt undervalued and not respected by society, while just 14 per cent felt valued and 55 per cent said they were sometimes treated badly.
The report also highlighted that retired people have £8200 of personal debt, but contribute £25bn a year to the state through unpaid care, community and voluntary work.
Mr Fazzini-Jones called for more respect for pensioners and more representation of this growing sector of society.
He said simple financial products that were easy to understand, accessible and offered good value could also help, adding: “Our retirement nation is not a homogenous group, it is a big part of society, rich in its diversity and with many members who are net contributors.”
Scott Gallacher, director of Leicestershire-based Rowley Turton, said: “Most people approaching retirement do not have retirement funding.
“Parents need to be more selfish and stop bailing out their children as much, in terms of debt and buying their first home, because much of this is done at the expense of their own retirement planning.
“We also come across people whose entire retirement planning is geared on inheriting from their parents.
“Financial education in the UK is shocking. It should be compulsory in schools and would make all the difference.”