Media coverage raises people’s pension income expectations

Media coverage raises people’s pension income expectations

The approaching pension changes and broader economic improvements could be raising people’s retirement income expectations, a Prudential specialist has claimed.

Vince Smith-Hughes, head of business development and technical for Prudential, said an increase in the amount people approaching retirement expected in income could be due to the pension changes announced in last year’s Budget.

He said: “Some of the increase in expectations we are seeing could be attributed to the media coverage over recent months on the changes in the pension rules that will come into effect from April 2015.”

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YearAverage expected retirement income

Source: Prudential

Prudential research among 7,687 non-retired adults aged 45 or older, including 1,012 intending to retire in 2015, found that those wanting to retire this year expected an average income of £17,000 a year.

This is up from the 2014 average of £15,800 and the 2013 figure of £15,300, but below the £17,800 number from 2009 and the £18,700 average from 2008.

Mr Smith-Hughes added: “It is encouraging that as economic confidence returns, our research continues to show a welcome upward trend in expected retirement incomes since the low point of two years ago.”

But he warned that providers and advisers must help pensioners plan properly to benefit from the pensions flexibilities and still secure an income.

He said: “The rule changes do not alter the basic principle of needing to secure an income that will last throughout retirement.”

This month the government launched Pension Wise, the brand for its pensions guidance service, in the run-up to the pension changes being introduced.

The Treasury announced that as part of the service, guidance sessions of approximately 45 minutes would be offered. These are set to be piloted from February.

Adviser view

Jamie Smith-Thompson, managing director of Kent-based Portal Financial, said: “Given the risk of making the wrong decision and the amount of confusion in the market, it is clear that getting sound financial advice has never been more important.”