Retirement planning raises a very particular set of financial capability issues that affect both working age people and older people in retirement.
This is an area that has undergone significant change, with the introduction of workplace pensions automatic enrolment and new freedoms around how people can use their pension savings. This trend looks set to continue with changes in areas of guidance and financial advice, pensions tax relief, pension transfers and charges all likely to affect financial capability.
12 million people in the UK are not saving enough for their retirement (DWP, 2014).
While automatic enrolment will see more people saving into pensions, some people will need to save more to have an adequate income in retirement. The ability to access pension money from age 55, and have the freedom to make their own income choices, may also have an impact on later life.
The Strategy reflects the unique challenges people face when saving into a pension, making decisions about retirement income, and managing retirement savings throughout life.
Priorities for the Strategy are to:
- Create a retirement planning financial capability tracker that will provide a composite measure of capability when saving and planning for later life
- Pilot interventions with some employers to help their employees see the need to and increase their retirement savings.
- Improve access to pension information
- Lead the coordination of collaborative efforts to improve the consumer retirement journey
- Improve access to, and consumer understanding of, guidance and regulated financial advice
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