PensionsNov 17 2014

Advisers can reap at-retirement opportunities: Aegon

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Financial advisers can take advantage of increasing expectations for retirement income coupled with a low level of understanding following the Budget at-retirement reforms, according to research from Aegon UK.

According to their retirement readiness report, only 6 per cent of 4,083 adults surveyed in September are on track to achieve the retirement they want, despite the focus on pensions following the announcements of major at-retirement reforms.

While 32 per cent were more positive about pensions following the Budget, this has pushed retirement income expectations to £41,000 from £35,000, meaning that the number of people on track has fallen from 7 per cent in April when Aegon published its first report.

The report also shows a wide variety of views and levels of understanding about the implications of the at-retirement flexibilities, with the majority of people still believing that some form of guaranteed income is still a requirement for retirement.

David Macmillan, managing director at Aegon UK, said that the changes represent a significant opportunity for advisers.

“Our research shows that while people’s goals about the amount of income they would like in retirement have increased in the last six months, the amount people are saving has not kept pace with their expectations.”

He added: “Advisers will play an important role in explaining the range of options open to people today and highlighting the most efficient way to spread their income over the course of their retirement whether that be through drawdown, guaranteed products or a combination of both.”

Furthermore, only 30 per cent of respondents knew the value of current maximum state pension, with 31 per cent over-estimated the figure which will make up a major part of many people’s retirement income.

The research also revealed that over half (53 per cent) of those surveyed admitted to having never checked the performance of their retirement savings, while just 11 per cent managed their pension online.

Responding to the last point, Mr Macmillan noted that it will still be increasingly important to offer savers a pension they can access in their own time.

peter.walker@ft.com