Two in five savers admit to never having reviewed their retirement plans and 60 per cent say they rarely do so, according to new research which highlights the challenge of inertia facing bodies attempting to engage prospective retirees with ‘guidance’ services.
Despite significant changes to global financial markets, 61 per cent of non-retired people admit to not reviewing their long-term savings and investments, including 43 per cent who said they had ‘never’ reviewed retirement plans.
Just over a fifth said they had reviewed their investments over the past 12 months, with those approaching retirement faring a little better than the wider averages with more than half saying they have reviewed in the past four years.
In the 55-64 year old range, the survey found 53 per cent had reviewed their retirement plans over the past four years and 52 per cent said they had specifically reviewed their pensions.
However in the 54-56 range, covering the age at which the new freedoms apply and where guidance will be targeted, just 18 per cent of respondents said that they were ‘very’ aware of the level of risk involved in their investment portfolio, with a further 38 per cent ‘fairly’ aware.
The research was conducted online by ICM research on behalf of Baring Asset Management from a sample of 1,513 non-retired adults.
It comes amid growing concern over potentially low take-up of the guidance services being set up to help people approaching retirement make informed decisions once new freedoms come into force in April.
Most recently, Michelle Cracknell, chief executive of The Pensions Advisory Service which will provide the telephone channel of the guidance guarantee, told MPs that initial expectations were for just one in four savers to use the service, rising eventually to three in four.
In total, less than half - 46 per cent - of Barings’ respondents said they were either very or fairly aware of the level of risk involved in their investments. Two-fifths of non-retired people, equivalent to 8.2 million people, opted for the default option when they reviewed their pension.
The number of people selecting the default options is now the highest since the survey began - it was 36 per cent in 2009 - but only half described the explanation as either ‘very’ or ‘fairly’ good, whereas 21 per cent said it was not explained at all or they cannot remember.
Rod Aldridge, head of UK wholesale distribution at Barings, said: “It is absolutely vital to fully understand the asset allocation and risk profile of your retirement funds and pensions, otherwise the risk is that you could suffer from a misallocation of assets and be inappropriately invested.
“It is also vital to regularly check that you have the right asset mix to match your risk profile, particularly if there are changes to your life that could alter your appetite for risk... too many people are forgetting or ignoring their retirement plans.”
ruth.gillbe@ft.com
Additional reporting by Ashley Wassall