Futures on hold: Brits' excuses for failing to plan for retirement

Article date: 9 March 2007

  • 'It will never happen to me'
  • 'I never really think about my pension or saving forretirement'
  • 'I don't understand retirement and itsissues'
  • 'I think it is boring'

Research1 by the new website www.six-steps.org, (part of Aviva,the savings, investment and insurance group) reveals that a thirdof Brits (32%) delay their retirement plans because they don'tunderstand the jargon. To help provide a solution to this problem,www.six-steps.org has beenlaunched to offer people access to a jargon-free, unbiased planningresource to enable them to make informed financial decisions forretirement.

The research shows that a fifth (20%) of Brits think retirementis too far off to worry about now and 14% haven't thought abouttheir future at all yet. As a result two thirds (65%) do not feelfinancially prepared for retirement.

As many as 14 million2 (32%) Brits are putting offtheir retirement plans because they are discouraged by financialjargon. Almost a quarter (24%) of Brits have admitted to notunderstanding financial terms such as NPSS or annuity3,with a further 17% admitting they don't understand the subject ofretirement and its associated issues.

It seems men are more confident that they understand financialterms with twice as many men (21%) saying they have a goodunderstanding compared to just 11% of women. As a consequence,financial jargon is more likely to put women off from finding outmore information about planning for their retirement - 34% of womencompared to 29% of men.

Other excuses for not planning ahead for retirementinclude:

  • 'It-will-never-happen-to-me'
    One in two(48%) adults under 30 years old think planning for retirement isnot worth worrying about because it is too far away.
  • Retirement is boring
    1.7million4 Brits (4%) think retirement issues areboring
  • 'The Ostrich effect': bury your head in thesand
    14% admit to never really thinking about their pension or savingfor retirement

Lynne Gray, Director of Corporate Communications, Aviva plc,says: "It is concerning to see that so many are making excuses thatcould effectively put their future on hold. Burying your head inthe sand, being frustrated by financial literature or worse stillbeing apathetic about your finances will leave you feelingfinancially underprepared and worried about your retirement. It isimportant for people to realise that there is advice out there onretirement planning that is easy-to-use and jargon-free."

Life's distractions
Distracted by the hereand now, many Brits prefer to prioritise the more immediate issuesthey face. When thinking of the most important financial hurdles intheir life, most Brits rank planning for their retirement onlyfourth most important, after buying a car (1st), booking a holiday(2nd) or buying or renovating a house (3rd).

Lynne Gray continues: "The UK is gripped by a short termapproach that needs balancing out. Essentially, Brits tend toprioritise saving for two weeks in the sun rather than thinkingabout how they are going to fund 30 odd years in retirement."

Short-termism is particularly prevalent in those aged between 18- 29 years with half (48%) in this age range believing thatretirement is not worth worrying about as it is so far away. Thiscompares to 15% in the 30 - 50 year group and an unsurprisingly 1%in the over 50s. 

Lynne Gray concludes: "We recognise that there is a gap infinancial literacy and apathy towards retirement planning and withthe launch of www.six-steps.org we have made inroads to helpimprove the situation. We want people to feel confident about theirfinancial future and so through www.six-steps.org we offer anunbiased financial planning resource, free from jargon with the aimof helping people to start making informed decisions for theirretirement."

The Economic Secretary to the Treasury, Ed Balls, said: "We wanteveryone in society to have access to, and use, financial serviceswith confidence. Financial decisions can be difficult. Financialproducts are complicated and there can be too much jargon. Thisputs people off, or they can end up buying something that is notright for them. Sometimes people just want to discuss theirfinancial options and not buy anything. We believe there is a gapin the provision of this last type of advice - generic advice - andwe are pleased to see Six-steps.org playing a role in thisarea."

For further information on how to plan for retirement and theSix-Steps retirement planner tool people can visit www.six-steps.org.

-ends-

For further information, pleasecontact:
Lansons Communications
Joe Laing/Aisling McCarthy     
tel: 020 7294 3649/0207 2943633                 
e-mail: joel@lansons.com/aislingm@lansons.com


Notes to editors
1. Six-Steps.orgresearch conducted by YouGov from 24 to 26 January 2007. This isbased on a sample size of 2,679 UK adults (aged 18+)

2. Source: Number of adult population = 44,200,000 (source:YouGov, Nov 2006). 32% (from research -see note 1) of 44,200,000 is14,144,000.

3. NPSS: Under the current proposals thisis envisaged to be a Government sponsored Money Purchase typepension scheme, into which people not in a workplace pension wouldbe automatically enrolled. Employees will contribute 4% of theirsalary, their employers 3% and the Government 1%. The benefitsaccrued within NPSS would be paid in the form of an annuity (seedefinition).
Annuity: A series of payments, most commonly paiduntil the end of a specified period or the death of therecipient.

4. Source: Number of adult population = 44,200,000 (source:YouGov, Nov 2006). 4% (from research - see note 1) of 44,200,000 is1,768,000

About Six-Steps
Six-Steps is a free,unbiased financial planning resource dedicated to helping peoplemake informed financial decisions for retirement.

This UK-focused site is the first Six-Steps site to launch;further sites will follow for other countries.

Six-Steps is produced by Aviva plc, the world's fifth-largestinsurance group and the biggest in the UK. Aviva is one of theleading providers of life and pensions products to Europe and hassubstantial businesses elsewhere around the world. Its businessesinclude Norwich Union and RAC in the UK, Hibernian in Ireland,Delta Lloyd in the Netherlands and Commercial Union Polska inPoland.

Research carried out for Aviva shows that people around theworld want help to feel confident about taking decisions abouttheir financial future. Six-Steps helps to meet this need byproviding straightforward, unbiased, personal finance information.Aviva will not offer financial services on this website and users'privacy is assured.

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