Around 70% of advisers believe clients will have to learn to accept higher levels of risk when planning for retirement, claims Lincoln Financial Group.
The survey of 107 advisers, carried out by George Street Research on behalf of Lincoln, suggest people need to take greater care with their financial planning to ensure they have enough money for a comfortable retirement.
But according to Lincoln Financial, the findings of the survey suggest for the majority of advisers this means clients should be willing to accept higher levels of risk when investing for retirement.
It adds the latest figures from the Association of British Insurers (ABI) show a 54% rise in total single premium individual new pensions business and a 45% rise in regular premiums new business compared with the previous year, suggesting the A-day reforms have revived the pensions market.
Helen Turner, director of business development at Lincoln Financial Group, says IFAs play a crucial role in advising people on how to plan for retirement, as shown by the 80% share of new personal pensions business being taken by the IFA and whole of market distribution channel in 2006.
However, she says while the A-Day reforms have helped revive the UK pensions market despite the constant talk of pension crisis and the general air of gloom over financial planning for retirement, changes still have to be made.
Turner adds: “It is striking that IFAs believe their clients will now have to accept higher levels of risk in their retirement income planning and encouraging that IFAs will use their expertise and experience to help clients understand the issue when planning for retirement.”
The research follows the publication of the ‘Freetirement Generation’ report by Friends Provident which reveals 68% of retirees believe they will need more than the Basic State Pension in order to continue to live comfortably.
Findings from the report, carried out by the Social Issues Research Centre (SIRC), also revealed just 4% believe the BSP is sufficient for retirement, while seven in 10 people – including workers and retirees – estimate they need £600 a month or more to live comfortably.
In addition, although 69% of current retires have adequate funds to support themselves in retirement, 32% of workers believe they will struggle financially when they stop working, and 14% wish they had saved more.
Jeremy Ward, head of pensions marketing at Friends Provident, says the vast majority of people need far more money that the State provides in order to live comfortably, with three-quarters expecting to need more than £600 which is significantly more than the State provides.
He adds: “Considering that a quarter of people haven’t yet started planning or don’t intend to plan for their retirement, this is something they can only dream about. By ignoring how much they need to save to live comfortably in retirement or how soon they need to start saving, many Brits are facing a potential pension shortfall.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email [email protected]IFAonline
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