Pension providers need to encourage members to plan their finances from an early age, if they want to encourage financial wellness and better retirement outcomes.
These were the conclusions from new Standard Life research that was shared exclusively with delegates at the Corporate Adviser Summit. Revealing the figures, Neil Hugh head of propositions for Standard Life said that 50 per cent of those who had planned their retirement are more confident about the decisions they’ve made, compared to just 16 per cent of non-planners.
The survey – conducted among 5,000 diverse participants – also found 89 per cent of those who planned for their retirement are enjoying their retirement compared to 78 per cent of non-planners.
Hugh said: “There was a clear message that came through from everyone in retirement that they wished they planned more. We also looked at stats that said the people who have actually done a lot of planning are already a lot happier in retirement.
“People later on in retirement have talked to us quite a lot about what they’re seeing and that is that they haven’t planned for the fact that their retirement will go through multiple phases. Many of them haven’t spent enough in early phases thinking they would have that sort of ongoing expenditure and it wasn’t going to potentially drop off as they go into a non-active phase.”
Financial wellness is a state where members feel secure and in control of their finances said Hugh. In terms of defining financial wellness, Hugh said: “It’s less about thinking of it as an Isa or a debt solution but rather how you get someone feeling secure and empowered about their finances.”
Some of the issues members face are not knowing where to start when it comes to saving, issues with balancing short-term and long-term goals, difficulty with understanding the industry’s jargon, and issues around decision making. Hugh said: “If we’re going to get people engaged and get people feeling more confident and empowered we need to help them with those short-term goals to get them to the long-term ones.”
Research also found that men are more confident about their finances particularly in the area of decision making. Gen Z participants said they “done a great deal of planning or thinking” about their retirement.
Ultimately better habits and more confidence are required from members for great financial wellness and providers should tailor options to individuals’ needs to help them gain confidence and in turn, become better planners.
Hugh said: “We’re not just seeing the fact that people get confidence from the planning, we are seeing that those who are more confident are more likely to plan”