A good part of the reason that clients see planners will be to do with retirement planning, getting a grip on their pension savings and working out a way forward.
With this in mind the ignorance about pensions among the general population is little short of extraordinary and is deeply concerning. It was highlighted this week in a major survey of 2,000 consumers carried out in January by the PLSA.
56% of workers concerned about retirement savings
One of the key findings was that huge numbers of people have no idea how much they actually have saved for retirement.
Ask people how much they owe on their mortgage or what interest rate they are paying and they can probably tell you. Ask them how much they owe on their credit card and they can probably give you a good idea. Ask them how much is in their current account and…well you get the idea.
Ask them how much exactly is in their pension pot or pots and, well, the response will likely be utter bafflement.
The PLSA survey found more than half of workers (54%) were in the dark about the size of their pension pots. Some 60% of women and 49% of men could not state with some certainty how much they had saved to keep themselves in comfort in the final 20 or 30 years of their lives. Astonishing.
Younger workers were more likely to be ignorant but even 48% of those aged 55+ said that they did not know the amounts they had saved.
It’s no wonder that 56% of respondents said they were concerned about how much they had saved for their post-work lives.
The Pensions Dashboard cannot come soon enough but I don’t blame pension savers for this ignorance. I blame the pension providers for utterly failing to give their customers clarity about how much they have saved. I struggle at times to understand my own pension statements and I’ve been writing about pensions for 20 years.
What the average man (or woman, Reg) on the Clapham omnibus can deduce from their pension statements is anyone’s guess but clearly it’s not clarity.
We should be able to say “I have £XXXXX saved in my pension pots and when I retire at 65 I will get a pension of £XXXX a month after tax.”
It should be that simple. Until it is the financial services sector will be failing.
Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with 30 years experience. This topical comment on the Financial Planning news appears most weeks.