Almost half of retirement savers worry they are being forced to take more risks with their pension planning because of the shrinking options for guaranteeing an income in retirement, MetLife has revealed.
The Guaranteeing Real Pension Freedom report found 45 per cent of over-forties said the lack of options for guaranteed income is increasing the risk of saving for retirement as annuity providers withdraw from the market and rates continue to fall.
The research showed 57 per cent of the age bracket were concerned low long-term interest rates were making retirement saving more difficult and 52 per cent were concerned about not having income certainty in retirement.
Financial advisers supported the concerns of retirement savers with two-thirds (67 per cent) of advisers worried about the lack of choice for clients who want lifetime guaranteed income.
Simon Massey, wealth management director at MetLife UK, said: “Our research has uncovered a worrying gap in knowledge which has the potential to massively impact the retirement savings of a huge number of people.
“Despite almost half of savers taking more risk because of a lack of guaranteed income solutions for life, one in five admit they don’t understand the choices they face to generate this retirement income. However, if they were confident, they might see there are ways of obtaining the guarantees they want.”
According to the survey, nearly six out of 10 (57 per cent) for over-forties were worried low long-term interest rates were making retirement saving more difficult and 52 per cent were concerned about not having income certainty in retirement.
MetLife said it was calling for guarantees of a drawdown to form a central part of the government’s new guidance framework to help prevent the unnecessary risks people are taking with their savings at retirement because they don’t understand the choices they face.
The report revealed an estimated 75 per cent of retirement savers said having a guaranteed level of income in retirement and flexibility was important. Around 26 per cent wanted all their retirement income guaranteed for life.
They are supported by advisers who believed clients should have at least 37 per cent of their income guaranteed. And advisers themselves wanted at least 32 per cent of their own retirement income guaranteed for life.
The report was conducted in August and September 2016 among 1,006 retired people and 1,141 employed people aged 45-plus in addition to 107 specialist retirement advisers.