Financial crisis a catalyst for upsurge in rethinking retirement plans

Article date: 16 June 2011

  • 61% of clients are now more likely to ask for advice on pensions
  • 22% report greater levels of trust in advisers than before the financial crisis
  • 70% now more worried about how to pay for their retirement.

Intermediaries report the fallout from the financial crisis has caused a massive upswing in demand for pension advice, according to a new survey from Aviva. The survey, of over 300 pension advisers, compares the perception of clients’ attitudes to pensions before the economic turmoil (2006) with the current situation (2011).

Aviva found attitudes towards retirement funding have been profoundly affected by the crisis, with clients now 61% more likely to come to advisers with their concerns than they were before the financial crisis (2006).

Those most affected have larger than average pension pots, with more than 50% of those with pension pots of £125,000 or more now more likely to ask for advice than they were five years ago. Significantly, advisers claim that none of these clients are now less likely to seek pensions advice.

Impact of last five years on clients asking for pensions advice (by size of pension)

 

£125,000-£149,999

£150,000-£174,999

£175,000-£249,999

£250,000-£274,999

£275,000-£299,999

£300,000+

More

53%

72%

61%

75%

50%

67%

The same

47%

28%

39%

25%

50%

33%

Less

0%

0%

0%

0%

0%

0%

Source: Aviva

Intermediaries also report that the concept of retirement is evolving, with the number of clients intending to work beyond the standard retirement age increasing by 71%.

The findings also suggest that clients are now more aware of the impact of external factors on their pension pots due to the financial crisis. Intermediaries say 34% of clients are now more likely to think about the effect of inflation on their finances, and 40% have greater concerns about taxation than they had in 2006.

Increased awareness of risk and rewards:  

One change to emerge as a result of the crisis is that advisers are reporting their clients have become more aware of financial risks and rewards, with 42% apparently now seeking further advice for investing in asset classes that carry risk, but greater reward. Just how willing appears to be dependent on the size of their existing pension pot, with advisers reporting those with pension pots of less than £100,000 are more likely to be willing to invest, whereas those with pots greater than this remain cautious with no change in investment attitudes.

On average 70% of clients say they are now more worried about how they will pay for their retirement than they were prior to the financial crisis. Almost all clients (95%) with small pension pots (up to £25,000) admit having greater concerns than five years ago, and 71% of those who already have large pots (over £300,000) say they feel more worried.

Proportion of clients reporting increased concern about retirement income - by size of pension pot

Graph showing the size of pension pot

Source: Aviva

The events of the last five years have had a negative effect on people’s attitudes towards both financial services companies and the Government; however conversely it has increased receptiveness towards professional financial advice.

While 76% of clients say they trust the Government less and 47% say they trust financial services firms less than they did in 2006 it is better news for advisers. The percentage of clients who say they trust intermediaries more than five years ago is up by 22%, compared to 72% who haven’t changed their opinion and just 6% whose opinion has worsened.

Clive Bolton, ‘at retirement’ director at Aviva, said: “The financial crisis has focused clients’ minds on their pension savings; increasing awareness of the need to provide for themselves in retirement and the need to protect what they already have.

“The turmoil has left many clients feeling anxious about the future and a greater number are now expecting to have to work beyond the ‘standard’ retirement age.

“Aviva believes the retirement industry needs reform so it can better serve the needs of tomorrow’s retirees. Aviva’s report – Rethinking Retirement in the UK – calls on the industry to adopt a number of practical measures such as making annuity comparison easier and making the process more streamlined and informative.”

-ends-

If you are a journalist and would like further information please contact:

Aviva press office:
Jess Geoghegan: 01904 684128 / 07800 695673 / jess.geoghegan@aviva.co.uk
Tom Wilson: 07800 692053 / tom.wilson@aviva.co.uk

Methodology:

Research carried out on 331 UK pension intermediaries between 10 April and 6 May 2011

Notes to editors:

Aviva is the world’s sixth largest* insurance group. We provide more than 53 million customers with insurance, savings and investment products with total worldwide sales in 2010 of £47.1 billion**.

We are the UK’s largest insurer with 19 million customers and one in three households has a relationship with us. Our combination of life, health and general insurance, together with motoring services from RAC, is unique in its scale and breadth in the UK market.  Customers can choose to buy our products through intermediaries, our corporate partners or from Aviva direct and we have become the partner of choice for many of the UK’s biggest organisations. 

We are ranked as one of the UK’s top 10 most valuable brands and Aviva plc are in the top 10% of socially responsible companies globally in the Dow Jones Sustainability World Index. In 2010 we invested £4.3m into our communities in the UK, which included 1,500 Aviva volunteers giving 24,000 hours for good causes. In addition, our employees gave £600,000 through fundraising and donating. Read our corporate responsibility report at www.aviva.com/2010cr.

Aviva is working in partnership with Railway Children through the Aviva Street to School programme to get children living or working on UK streets back into everyday life. Find out more at www.aviva.co.uk/street-to-school.

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* based on gross worldwide premiums at 31 December 2009.
** at 31 December 2010.

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