DIY Investor Magazine
/
2015 Issue
8
RETIREMENT REALITIES
WHAT LIES BENEATH THE INCOME GAP?
A recent survey conducted by You Gov on behalf of
M&G Investments has revealed some of the factors
behind the ‘gap’ that is accepted to exist between
people’s expectations and reality in retirement.
A sample of 2,217 members of You Gov’s UK panel were
surveyed via an online interview and the results provide
a fascinating insight into the reasons why some people
fail to make adequate financial provision for retirement
and reveal some of the behaviours and actions that
might make a difference
New pension rules that came into force on 6th April
2015 give unlimited freedom to anyone aged 55 and
over to use a pension pot accrued via a Defined
Contribution (DC) scheme in any way they choose;
the survey was conducted to gauge the level of public
awareness around the reforms and to predict whether
it is likely that those in retirement are equipped to
achieve better financial outcomes and thereby close
the ‘income gap’.
With the opportunities that come with pension freedom
come attendant risks and whilst some people will be
able to close the gap, others face the risk of widening
it unless the other gaps uncovered in the survey are
plugged – gaps in goals and expectations, gaps in
knowledge and understanding, gaps in attitudes and
gaps in planning.
The survey concludes that the most likely route
to a comfortable retirement seems to be careful
planning and a willingness to take advice – both from
professionals and from older generations that have
already learned some difficult lessons.
RETIREMENT CHALLENGES
Since the middle of the last century, the uk has experienced profound demographic changes. This means
that as the ‘baby boom’ generation approaches retirement, it is looking increasingly unlikely that traditional
sources can provide adequate income for most people to enjoy the retirement they want.
Steven Andrew, Manager of M & G Episode income fund looks at the pension prospects for the next
generation and looks at the difficulties facing today’s income seekers
