Opinion  

Ideal retirement at odds with real retirement

Gillian Guy

It’s three weeks today until what has been dubbed as ‘pension freedom day’. Rightly there has been a huge amount of scrutiny and discussion around the upcoming reforms; the biggest pensions shake-up this country has seen for decades.

For some people seeing the name of Citizens Advice in these discussions may have been unexpected. But we are well known for responding to people’s needs across a wide range of areas, and that includes pensions.

Last year we helped people with over 80,000 pension issues, and the numbers going to the pensions pages of our online advice guide have risen by 89 per cent since 2012 to over 200,000 last year.

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We welcomed the chancellor’s announcement in last year’s Budget that people would have more choice and control over their pension and retirement options.

This was enhanced by the government’s commitment to offer free and impartial support to help people understand these changes. And we are pleased to be delivering the face-to-face channel of what we now know as the Pension Wise service, to ensure that people have the support and guidance they need to make informed choices about their retirement.

Over the past few months discussions around the changes to pension choices have focused on the technical and financial implications, as well as a lot of curiosity about how the new Pension Wise service will work.

There has been less focus on how people approach their choices about retirement and the different factors that inform decision-making. But in a new report published today (16 March) Citizens Advice looks in depth at how people approaching retirement think about their financial future in the context of wider circumstances.

What we have found is that people’s perception of an idealised retirement is often at odds with their real experience. Instead of retiring and being able to go on holidays or renovate their home, our ‘how people think about older age and pensions’ report reveals many people face challenges managing their money day-to-day, planning with certainty and supporting their family.

We find that people don’t think about pensions in isolation, rather in the context of other personal and financial decisions. The type of financial product people make is in fact just a small part of any pension decision.

People approaching retirement today face very different challenges to their parents. And our figures back this up: in the first quarter of 2014, of the 1,672 people who sought help from Citizens Advice about occupational and personal pensions, 50 per cent also asked for help on one or more other issues such as employment, tax and benefits, debt, consumer issues or family and relationships.

As life expectancy rises and pressures on household finances grow, many face circumstances they may not have expected as they approach retirement such as adult children needing support or older relatives needing care. During interviews for our report people told us they can struggle with such pressures, and keeping up to speed with changes that could affect them.