Context
‘Future Focus’ is one of the five Agendas for Change the Money and Pensions Service identified in its UK Strategy for Financial Wellbeing 2020-2030. It focuses on the need for people to engage with their future and be empowered to make informed decisions for their retirement and later life.
The goal states that, by 2030, there will be five million more adults in the UK who feel they have enough knowledge to make informed decisions for their retirement or, if they are already retired, to feel confident making decisions about their later life. In 2018, there were an estimated 23.6 million adults of working age (18-64) in the UK (45% of the working-age population) who felt confident with such decisions. It is uncertain how the impact of Covid-19 and the policies introduced to control the spread of Covid-19 may have impacted progress against this goal.
The study
‘Future Focus’ is one of the five Agendas for Change the Money and Pensions Service identified in its UK Strategy for Financial Wellbeing 2020-2030. It focuses on the need for people to engage with their future and be empowered to make informed decisions for their retirement and later life.
The goal states that, by 2030, there will be five million more adults in the UK who feel they have enough knowledge to make informed decisions for their retirement or, if they are already retired, to feel confident making decisions about their later life. In 2018, there were an estimated 23.6 million adults of working age (18-64) in the UK (45% of the working-age population) who felt confident with such decisions. It is uncertain how the impact of Covid-19 and the policies introduced to control the spread of Covid-19 may have impacted progress against this goal.
Key findings
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Levels of financial confidence and planning: There were initial indications that people’s confidence had been impacted by the pandemic, including: lower levels of confidence among 45–54-year-olds about their financial situation compared to other age groups; and a drop in people’s confidence in their ability to manage money between February and October 2020.
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Gender and pensions: Significant challenges to improving the pension and retirement outcomes of women existed before the pandemic. The gendered impacts of COVID-19 on work and pensions are complex.
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Ethnicity and pensions: Before the pandemic, the ethnicity pensions gap was considerable, and the labour market and pension impacts of COVID-19 is likely to widen this gap.
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Disability and pensions: The pandemic impacted the employment of disabled workers more severely than non-disabled workers. Current income, and therefore pension contributions, had been reduced disproportionately.
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Near or in retirement: 13% of workers aged 50 and over intended to change their retirement plans as a result of the pandemic.
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Factors affecting delivery of the Agenda for Change: The challenge of reaching people in their 50s and/or those in retirement, particularly in light of the entrenched behavioural biases they may endure when exercising the pension freedoms and choices they face, exposure to forecasted corporate insolvencies and their potential susceptibility to fraud and scams.
- The challenge for the under 50s relates to more difficult labour conditions impacting pension provision. This includes the contributory nature of the state pension (contributions are not made automatically when people are out of work) and the qualifying threshold for auto-enrolment into workplace pensions (which excludes those in the lowest-paid and least secure jobs).
Points to consider
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Methodological strengths/weaknesses: Although the paper is subtitled as a rapid evidence review, no methodological details are provided. The report may be better treated as an overview of the evidence, and it should be assumed that the systematic or quality assessment elements that normally characterise rapid reviews were not employed.
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Applicability: The summary relies on a small number of evidence sources and is likely to be incomplete and potentially skewed by those sources.
- Many of the hypotheses and conclusions that are presented necessarily rely on the authors assumptions and predictions about the future.
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Relevance: Due to extremely limited existing evidence which related specifically to people’s confidence in relation to retirement and later life planning (the subject of the Agenda for Change), the parameters of the review were widened. As such, only a minority of the evidence presented relates directly to the Agenda for Change.
