A study has found 47 per cent of employees are suffering from ‘pensions paralysis’ following retirement freedom reforms.
The research, conducted by Willis Towers Watson in conjunction with Nottingham University Business school, found almost half of all employees are agonising over their long term financial decisions.
The study has analysed the approach and behaviour to retirement saving of almost 2,000 UK workers.
Early results from the study show even after the financial decision was made, 43 per cent had doubts about their decision.
The large number of available saving options is one of the main factors contributing to this crisis of confidence – with more than a third of consumers (34 per cent) revealing they think there is too much choice when it comes to saving for retirement.
In addition, the findings uncover a number of key economic factors and issues that are further compounding barriers to long-term savings.
Long-term economic factors such as low or poor interest rates (48 per cent), a lack of certainty over rate of return (22 per cent) and being unclear on the extent of investment risk (16 per cent) were still reported to be the main issues frustrating employees.
Minh Tran, director in Willis Towers Watson’s wealth and retirement practice, said: “The results of our study highlight a savings problem, that has become more pertinent with the introduction of auto-enrolment.
“Instead of encouraging people to save more, increased choice seems to have created a decision roadblock. Coupled with economic uncertainty and conflicting financial priorities, this is creating a kind of pension paralysis where most employees end up in the default option”.
Martin Bamford, managing director at Informed Choice, said: “We often come across clients who face pensions paralysis and generally lack the confidence to make important financial decisions.
“The inability to make financial decisions can be just as damaging to your financial health and making poor financial decisions.
“One of the attributes we look for in our clients is the ability to make decisions, which often comes from experience in an executive level position or as a business owner.
“It is important to make financial decisions with confidence, especially when your long-term financial security in retirement is at stake.”