Regular financial check-ups for the retired and people approaching pension age are critical to help the growing number of people aged 60 and over navigate later life, according to an Age UK report published today (25 June).
Age UK’s Financial resilience in later life report says a new approach is needed to financial planning that concentrates on “building resilience” rather than developing a single ‘plan’, including periodic financial MOTs and guidance in the lead up to and in retirement.
These ‘road-checks’ are particularly important for those with modest savings, many of whom will not have used traditional financial advice.
In this year’s Budget, chancellor George Osborne pledged that all retirees will receive face-to-face, impartial guidance.
It is currently under consultation to see what shape the ‘guidance guarantee’ will form, however many respondents to the consultation warned that it would be costly and time-consuming for every person to have a face to face session. The Association of British Insurers calculated that it would cost £36 per person to deliver the guidance online.
According to Age UK, two thirds of people in the UK do not take professional financial advice, marginally down on figures for 2012.
Age UK’s report also calls for more honesty and transparency in financial products particularly around investment returns.
An analysis of 50 to 64 year olds in the UK by Britain Thinks for Age UK found that this generation, many of whom have weathered pensions and endowment mortgage scandals and more recently payment protection insurance mis-selling, have a low level of trust in financial institutions and a general feeling of being let down.
Age UK has also warned there is “likely to be a growing risk of scams” following the Budget announcement that pensions will no longer have to be converted into annuities from April 2015.
With a growing number of older people considering alternative ways of investing their savings, there is “likely to be an accompanying increase in bogus investment schemes”, Age UK said.
Tom Wright, Age UK group chief executive and co-chair of the Financial Services Commission said: “The concept of making one set of retirement plans at pension age is not fit for purpose.
“We believe a series of financial MOTs at significant points throughout retirement, together with a robust state and private pensions system, is the real way to help people make ends meet and live comfortably.
“We hope the financial services industry, regulators and government who worked with us during the Commission will now act on the blueprint we’ve laid out as a result of our discussions so that people in Britain can feel financially prepared for and confident about their later lives.”