UK pensions: A state of anxiety?
The Great British Retirement Survey 2023,* from interactive investor, the online investment platform owned by abrdn, highlights three pressing concerns facing savers.
The cost-of-living crisis continues to cast a long shadow. It is by far the biggest worry across all age groups, with more than half (57%) of respondents citing it as a major concern.
Running out of money was a major concern for 38% of respondents, dropping to 24% of those of pension age. Meanwhile, not saving enough for retirement was the third-biggest worry, with anxiety at its most acute among the group closest to retirement, namely 41 to 55 year-olds.
The survey, now in its fifth year, is the largest UK pension survey of its kind. Publication of the research coincides with the launch of interactive investor’s game changing Pensions Essentials product.
The cost-of-living crisis continues to cast a long shadow. It is by far the biggest worry for savers.
interactive investor’s Great British Retirement Survey 2023
Commenting on the results, Richard Wilson, CEO of interactive investor, pointed out that while a comfortable retirement increasingly rests on the individual, “the threads of love and care that bind generations together are strong”. Moreover, he said, “the impulse to pass on wealth and help those we love is palpable”.
However, Richard called on the government to move “front-and-centre” to help overcome the fatigue afflicting people planning for retirement, battered as they are by economic crises and constant changes to pension legislation.
He highlighted the role interactive investor is playing in helping individuals take charge of their financial future by slashing trading fees, developing investment tools, and providing content and educational insights.
Inflation haunts the nation’s finances
Alice Guy, Head of Pensions and Savings at interactive investor, said the report reveals how the cost-of-living crisis is “strangling retirement savings” and is “causing many savers – whether retired or not – to look anxiously at their pensions and savings, worrying if they will be enough”.
Figure 1: Has the cost-of-living crisis forced you to access your savings or pension quicker/earlier than planned?
Source: Interactive Investor, 2023
More positively, over half of the nation now talk openly with family about retirement and savings. Alice further pointed out that “nearly eight out of 10 now have a pension, and more than nine out of 10 of us who are working full-time have pensions”. Alice cited the impact of auto-enrolment, and how “it demonstrates the decisive role governments can have in shaping retirement futures”.
Our policy recommendations to secure retirement dreams
interactive investor believes that policymakers should consider the following key points to ensure people can look forward to retirement:
- Commit to maintaining the state-pension triple lock, so that older workers have financial certainty when it comes to the state pension.
- Consider increasing the minimum overall level of pension contributions from 8% to around 12%, with the ambition to rise to 15% in the future.
- Provide consistency around the pension tax system, so people can plan ahead for their retirement.
- Adopt a joined-up financial education strategy in the UK.
- Introduce tax changes that could make a meaningful difference to millions of families by helping them to pass on wealth without incurring punitive tax charges.
In conclusion, interactive investor hopes the report will help move pensions and retirement expectations up the political agenda and encourage families of all ages to think carefully about the implications.
* With a sample size of 9000, and 100 detailed questions, the Great British Retirement Survey 2023 is one of the largest retirement surveys of its kind. Research was conducted for ii by Opinium Research between May and July 2023.