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Pension freedoms possibilities cause angst for retirees

Advisers say retirees have mounting concerns they will run out of money and that pensions freedoms provide too many options to consider alone, Aegon research shows.

Adviser respondents to the research say three quarters of major challenges for their clients revolve around generating retirement income.

A total 38 per cent of adviser respondents say running out of money is their clients’ primary concern.

With pensions freedoms having provided a wider range of options for accessing money, 74 per cent of advisers say clients are choosing to retire gradually and stagger access to funds.

Aegon investment director Nick Dixon says these shifts in how retirees obtain their money is continuing to change.

In the four years since the introduction of pension freedoms, advised clients have mostly enter drawdown rather than taking an annuity or using cash.

For 60 per cent of surveyed advisers, retiring clients hold around three quarters or more of their assets in income drawdown.

Pensioner income starting to flatline says government statistics

Comparatively, 82 per cent of retiring clients hold a quarter or less of their assets in annuities and 89 per cent hold less than a quarter in cash.

Dixon says: “The freedoms have enabled individuals to adopt a more flexible transition into retirement, with people accessing pension savings to support a reduced working pattern.

“Our research shows that, with the flexibility, advisers are finding that clients are relying on them to guide them in the decisions they make, as many retirees fear running out of money.”

Over half of advisers’ retiring client bank are currently prioritising risk reductions over high returns, while many are setting aside enough to purchase an annuity in the future if needed.

Pension confidence low for over 60s despite financial security

A third of retiring clients’ assets across the board with respondents had their assets investment in multi-asset strategies with priority on diversification.

Dixon adds: “The world of work is changing fast and retirement is increasingly a journey of change rather than an event and it is crucial that those at, or approaching retirement, seek financial advice to build their confidence.”

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  1. […] those both planning for retirement and those that have already started withdrawing from a pension. Research from Aegon found 38% of financial advisers say running out of money is their clients’ primary concern as […]

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