Personal Pension  

Ageing population presents problems for pensions


    Frankly, they also might need to be communicated with in a different way. They also must not be treated as one homogenous in-retirement group, which they clearly are not.

    The Personal Finance Society’s chief executive Keith Richards has called for greater skill-base across the adviser community to support those in-retirement. We already have the Society of Later Life Advisers working to the same ends.

    The focus is on building certified expertise pools covering areas such as cash flow forecasting, income strategies, portfolio management, use of residential property as retirement income (i.e. equity release), tax advice (particularly associated with inter-generational wealth transfer), and specialist legal advice.

    This makes great sense, as there is frankly some very specialist help that is needed and in-retirees need help findings those experts.


    In the communications area, we need to think more about how we communicate, as well as what we communicate, to assist sound financial decision-making. This resonates well with a theme, which the more enlightened pension providers are already pursuing, of having different customer journeys for users of different ages.

    Step forward communications psychologist including Global Head of Behavioural Economics Intelligence & Networks, Liz Barker, who makes it clear communicating with the elderly is different from the rest of the population.

    Frankly after the age of 70, the brain is ageing fast and ‘crystallised intelligence’ is declining. More alarmingly, reasoning and deliberative capacity, otherwise known as ‘fluid intelligence’, begins falling as early as our 30s.

    She advises:

    ■ Putting fewer choices in front of this audience in communication if at all possible

    ■ Categorising and sign-posting choices well – perhaps in terms of risks of not hitting target

    ■ Increasing ‘cognitive ease’ – using plain English and jargon free language in communications

    ■ Focusing on losses that may be incurred if no action is taken at a specific stage, as over the age of 70 we become more loss averse and more prone to inertia.

    As we get older we don’t trust our memories as much, so we also become more at the mercy of scammers who can trick us by concocting and playing back ‘false memories’ with a view to taking money from us.

    That’s before we get into the grim issue of cognitive decline which is becoming a big problem with our ageing population. One in six people over the age of 80 have dementia, amounting to 850,000 sufferers in the UK today. These numbers will more than double to reach 2m by 2051. 225,000 will develop dementia this year alone.

    The industry is already looking for ways of safeguarding the growing army of the aged. The ABI teamed up with BIBA to publish a Vulnerable Customer Code last month which brokers and pension providers alike are signing up to.