Retirement Planning - UK - September 2008

Abstract

With a rapidly ageing UK population that is spending increasingly more time in retirement, due to improvements in longevity, it can be argued that planning for retirement has never been more important. This is especially true if one considers the fact that company support for workplace pensions schemes has declined significantly since the start of the decade. With many firms closing or scaling down pension schemes there has been a significant shift in responsibility from the employer to the individual when it comes to ensuring a comfortable retirement.

As more of the onus has now shifted on to the individual new opportunities have been created for other areas of the retirement planning industry, such as the personal pension market as well as some non-pension alternatives such as buy-to-let property and equity release. At the moment, however, each of these markets is likely to be experiencing challenging conditions. Just as retirement saving has become more important high levels of personal debt, and more recently a slowing economy and rising inflation, has made it more difficult for consumers to put money aside.

This report presents an overview of the latest developments in the wider retirement planning industry, ranging from traditional occupational pensions, to personal pensions and alternatives such as buy-to-let property. In addition to an exploration of demographic and economic trends and legislative issues, the report also analyses market strengths and weakness and highlights potential market threats and opportunities. The final sections of the report provide insight into consumer trends in retirement planning related to product ownership as well as attitudes and behaviour towards long-term saving and retirement.

Key report issues:

• A rapidly ageing population, which will be spending more time in retirement, is putting more pressure on retiree finances making retirement savings more vital than ever before.
• Due to a high consumer debt and more recently rising inflation, people are finding it more difficult to save for retirement.
• A large proportion of the population have an apathetic attitude towards long-term savings and investment.
• The government has launched a number of initiatives in order to encourage greater participation in long-term retirement savings and investment.
• The launch of Personal Accounts in 2012 present a variety opportunities and threats for retirement planning product providers.
• Homeowners with deficient retirement provision are likely to be increasingly reliant on the wealth built up in their homes to fund their retirement.