Talking Point  

Lack of knowledge on pensions accounts deterring retirement savings

Lack of knowledge on pensions accounts deterring retirement savings

Most people who are about twenty years away from retirement lack knowledge about pensions accounts, according to IFS Wealth and Pensions’ Alan Chan. 

The director and chartered financial planner at IFS Wealth and Pensions warned that lack of knowledge on pensions accounts is a factor that is dissuading clients from saving into accounts.

Mr Chan said: “People do not realise that pensions accounts are not set in stone. Once they have built a sizeable fund they can transfer to another account.”

He added that most people who are in that age bracket tend to put off financial planning for other priorities such as buying a home. 

“They often put it off planning to next year, that very quickly becomes five years and later ten years,” he said. 

The main difference in challenges faced by those who are 20 years away from retirement versus younger people is that the older people are looking to save more, while the younger are still considering how much to earmark aside. 

Mr Chan said the ideal retirement portfolio for those who still have many years until they retirement is primarily made up of equities.

“History suggests equities have given the highest return. The ideal portfolio is made up of the highest risk somebody can take with the bulk of pensions being in equity. This is because you still have the time to recover from the highs and lows,” he added.