Number of advised clients phasing into retirement halves during pandemic

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  • 44% retired at a single point in time in 2020, more than double previous year
  • Numbers retiring gradually shrank from 74% in 2019 to 38% in 2020
  • 64% of queries to advisers since pandemic from clients aged 55 or older

The global pandemic caused many of us to reflect on what was important ─ family, quality of life, the environment and, of course, our financial wellbeing. It has brought about revolutionary change to work patterns and unfortunately an increase in the unemployment rate.

These are just two of the key factors which may have led to a dramatic reversal in the trend towards transitioning into retirement. Aegon’s recent Adviser Attitudes Report* found that the proportion of advised clients retiring in the traditional manner, at a single point in time, doubled last year to 44% up from 20% in 2019.

This turnaround bucks a trend visible since the pension freedoms were introduced, of people gradually phasing into retirement. In 2019, 74% of advised clients did so, but in the most recent survey this fell to 38%.

This trend is likely down to a number of push and pull factors, with many people reassessing their priorities and some opting to retire following a loss of work. This is borne out by recent ONS data highlighting unemployment among over 50s has risen to 3.7% from 2.8% since the start of the pandemic**.

It’s clear that the effects of the pandemic-induced market volatility have been most keenly felt by those who are near or at retirement and reliant on savings income to meet near-term living costs. The challenge of managing retirement income is one of the reasons that the majority of queries to advisers (64%) came from clients aged 55 or older.

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Steven Cameron, Pensions Director at Aegon comments:

“While the marked reversal of the previous post-Pensions Freedoms trend towards phasing gradually into retirement has taken everyone by surprise, it seems likely that ─ once the effects of the pandemic subside ─ people will revert to a more gradual transition into retirement. Accessing pensions flexibly can provide the financial means to move to reduced working hours while retaining the many benefits of still having some involvement in the workplace. Advisers can help clients navigate the complexities and benefit in the most tax-efficient way.

“Whatever else, these findings clearly demonstrate the immediate impact of the pandemic on clients’ financial plans and the important role of advisers in helping people, particularly those approaching retirement, reassess their circumstances in times of financial uncertainty.”

 

The value of an investment can fall as well as rise and isn't guaranteed. Your client could get back less than they invest.

 

Reference

*The findings in Aegon’s Adviser attitudes report 2021 are based on the views of 250 financial advisers from across the UK. Fieldwork by Opinium, commissioned by Aegon, October 2020. Comparisons to previous surveys refer to fieldwork by Opinium, commissioned by Aegon, February 2019.

**ONS unemployment figures for the over 50s - https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/ybvw/lms

 

Further information

Jonathan Henderson

Head of PR

Aegon UK

jonathan.henderson@aegon.co.uk

 

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: www.aegon.co.uk
  • Aegon’s roots go back more than 175 years – to the first half of the nineteenth century. Since then, Aegon has grown into an international company, with businesses in the Americas, Europe and Asia. Today, Aegon is one of the world’s leading financial services organisations, providing life insurance, pensions and asset management. Aegon’s purpose is to help people achieve a lifetime of financial security. More information on www.aegon.com
  • Figures correct, January 2021