Advisers balance retirement income and inheritance aspirations
- Aegon research with Next Wealth into the retirement industry provides new insights into people’s priorities for their retirement savings
- Over half (55%) of advisers say creating a sustainable lifetime income is the objective for the majority of their clients
- A fifth (19%) of financial advisers say passing savings on to loved ones is a priority for the majority of their clients, a decrease from 28% the previous year (2018)
- Advisers face challenges in managing competing demands against the backdrop of wider socio-economic influences, such as uncertainty over social care funding and volatile market conditions
Aegon’s research* into the retirement advice industry in the UK sheds new light on peoples’ varying objectives for their retirement savings. Over half (55%) of financial advisers say the majority of their clients are looking to create a sustainable lifetime income, the same proportion as the previous year (2018).
Individuals also want to use their savings to pass wealth down the generations. A fifth (19%) of advisers say the majority of their clients are looking to pass on savings to loved ones. However, this is down from over a quarter (28%) the previous year. The trend points to a greater understanding amongst clients of the challenges in sustaining retirement savings throughout retirement.
The research also shows only one in ten (10%) advisers say the majority of their clients prioritise using their retirement savings to withdraw ad hoc lump sums and just 1% of advisers say the majority of their clients want to completely withdraw their retirement savings over a short time frame. Both these responses remain consistent to the previous year.
Steven Cameron, Pensions Director at Aegon, comments:
“Since the pension freedoms, retirement savings have become more than just a means to provide a regular income for life. People now make use of the flexibilities to facilitate a gradual transition into retirement, transfer wealth to the next generations or take ad hoc lump sum withdrawals. The research shows creating a sustainable lifetime income is the priority for the majority of people but the ability to pass on savings to loved ones remains an objective for many.
“Decisions around when and how to take a retirement income are challenging and external influences feed heavily into the planning process. The government’s anticipated new plans for social care funding, for example, have significant implications for retirement aspirations as people need to know how much they are expected to pay themselves should they need care in later life. As we have seen over the last six months, a volatile stock market can also affect decisions, with individuals right to avoid taking large sums of money from their pension when fund values are depressed.
“In these times of great uncertainty, pension freedoms can give individuals huge flexibility over how to use their retirement savings, but this comes at significant risk and advisers are ideally placed to help individuals navigate their competing aspirations.”
*The research was conducted with 227 financial advisers and supplemented with in-depth interviews with a panel of advisers in Q4 2019. Comparisons to the previous year are based on research with 267 financial advisers in 2018. The full report is found here and also available on the Aegon ‘Advice Makes Sense’ hub which is designed to provide insight on topical issues and support advisers’ conversations with clients.
Notes to Editors
- In the UK, Aegon offers retirement, workplace savings and protection solutions to over three million customers. Aegon employs around 2000 people in the UK and together with a further 800 people employed by Atos, we serve the needs of our customers. More information: aegon.co.uk
- As an international life insurance, pensions and asset management group based in The Hague, Aegon has businesses in over twenty markets in the Americas, Europe and Asia. Aegon companies employ approximately 26,000 people and have millions of customers across the globe. Further information: aegon.com
Figures correct as of November 2019