Fear of finances leads to 'pensions paralysis' for the UK's over-40s

Article date: 16 April 2008

  • One in three still has no financial retirement plan

A fear of finances is creating a "pensions paralysis" among the UK's over-40s, according to research released today.

Over a third (37%) of those in their 40s admit they have no financial plan for their retirement, and of those who do, the same number (37%), say they have no idea what their final settlement will be.

The "pensions paralysis" study, by Norwich Union, reveals that a lack of understanding (41%) and "complicated" products (29%) are the biggest barriers to pension planning for the over-40s.

In fact, one in four (26%) over-40s without financial plans admit they're choosing to simply stick their heads in the sand rather than wade through the options.

Iain Oliver, head of pensions at Norwich Union, said: "This research reveals the challenge for the financial services industry not only in helping people understand why they must start pension planning, but also in simply educating them on the options available."

The research was commissioned to mark Norwich Union's launch of its new SIPP-lite style product, which features an Income Drawdown plan1. It outlines a "wish list" of options the over-40s claim would motivate them to buy into pension planning that includes:

  • A clear indication of the final settlement - even if that means less flexibility (36%)
  • The option to manage online in the same way as my bank account (23%)
  • Greater flexibility and the option to access my money - even if that means less certainty over the end settlement (16%).

The Norwich Union Income Drawdown plan provides an income drawdown option for customers where the sophistication of a SIPP is not needed.

Online account management2 and access to a comprehensive investment fund choice is also added to the Norwich Union Personal Pension range.

Iain Oliver, head of pensions at Norwich Union, said: "People clearly want more flexibility and control from pension products but the SIPPs that do offer that are niche options designed primarily for high-net worth customers.

"In essence we are providing a wider range of pension customers with a lot of the control, flexibility and fund choice they are looking for with a SIPP, and at a more competitive cost."


Norwich Union has produced a simple Guide to its new Income Drawdown Plan that is available from:

Jessica Gooch
Telephone: 0207 908 6447
E-mail: jgooch@lexispr.com

Jess Silver
Telephone: 0207 908 6545
E-mail: jsilver@lexispr.com

Notes to editors:

Norwich Union commissioned research with Tickbox.net amongst 1765 UK adults between 14 and 19 March 2008.

1 Norwich Union Income Drawdown:

  • Available to both new and existing Norwich Union pension policyholders
  • Income withdrawals can be taken monthly, quarterly, half-yearly, and yearly
  • Fund specific withdrawals will be available from April
  • Accepts Non-Protected Rights, Protected Rights and Safeguarded Rights
  • Minimum internal transfer(s) amount for set-up of Norwich Union Income Drawdown is £15,000 (after payment of any tax-free cash and Lifetime Allowance charges), but income withdrawals will not be possible until the total pension fund holding (crystallised and uncrystallised funds) with Norwich Union reaches £50,000 (ie only a tax-free cash lump sum will be available)
  • Minimum external transfer(s) amount for set-up of Norwich Union Income Drawdown is £50,000 (after payment of any tax-free cash and Lifetime Allowance charges)
  • Available for customers under age 73 as an Unsecured Pension Fund
  • Taking withdrawals may erode the capital value of the fund, especially if investment returns are poor and a high level of income is being taken. This could result in a lower income when the annuity is eventually purchased
  • The value of an investment can go down as well as up and is not guaranteed
  • Annuity rates may be at a worse level when annuity purchase takes place
  • If the maximum withdrawals are taken, high income withdrawals may not be sustainable during the deferral period
  • The investment returns may be less than those shown in the illustrations.

2 Online fund management to be available from summer 2008.

About Norwich Union
Norwich Union is one of the UK's biggest life insurers. It is a leading provider of life, pensions and investment products and one of the largest financial adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.

Norwich Union has strategic alliances with building societies and other leading UK brand names including CIS and The Royal Bank of Scotland Group. Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media.

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