1. Respect

“We need to change our attitude towards the Retirement Nation and recognise them as individuals and what they contribute to the UK.”

The Retirement Nation is not a single group of people – but a wide diverse group at different stages in their lives with varying needs and attitudes. Everyone in the UK needs to start recognising this and to respect the variety of types of people that go to make up this segment of our population.

The financial services industry also needs to consider how it communicates with the Retirement Nation, and to target different types in different ways. We need to appeal to their hopes and fears to help change their behaviour, and so help create a better financial life for them in retirement.

2. Representation

“The Retirement Nation is a big part of the UK society for what they contribute, but also the help and support they need. The Retirement Nation needs a greater voice in Government.”

Many of the issues that are most pressing to the Retirement Nation are dealt with by several different government areas – for example the Department for Work and Pensions, the Department of Health, and the Department for Energy and Climate Change.

We recommend the Government creates a Minister for Retirement, who will be able to see across all these government strands, and will take responsibility for making sure the needs of older people are understood and represented.

3. Education

“We need to help people maximise and make the best use of their financial wealth in retirement. The first step is to help people improve their knowledge about retirement and finance.”

The Retirement Nation shows a high level of inertia when it comes to making decisions about their retirement finances. This is often down to fear of things they don’t understand and not knowing where to start.

The industry needs to focus on education. People need to understand the choice of retirement products available, and what risks and challenges they will encounter in retirement. They need to understand the impact of inflation, but also, importantly, what they can do to combat the negative effects.

The Government can also offer more support and help to people preparing for and approaching retirement. In 2012, the Government will kick start an information campaign to educate people about starting a pension through automatic enrolment. But it could also consider what should be done to educate people approaching retirement – for example by giving everyone standard information when they approach retirement. This could tell them about their state benefits, including what support they could receive for long-term care, but also about how to convert any pension savings into a retirement income. It could signpost where to receive further information.

The media also has a role to play by continuing to highlight issues for people to consider as they approach retirement, and to publicise best buy tables for retirement income products, energy bills, or household items. It can help send out the message that by shopping around, people could save a little extra each year, which could add up to a substantial amount over the course of their retirement .

4. Simple products

“Financial services companies and government need to continue to work together to innovate and design new retirement products that meet the needs of the Retirement Nation and are easy to understand, easy to buy and offer good value.”

The financial services industry needs to encourage people to seek financial advice. But we need to be realistic and acknowledge not everyone will be able to get the professional help they need. So we need to make sure the retirement income market works better.

Although still a good solution for many, standard annuities are becoming less relevant for others, as people enter longer retirement periods where their retirement income needs to vary as they get older. The financial services industry needs to continue to innovate and design new retirement products that meet these changing needs, by putting people at the heart of product design.

But in doing so, industry and government needs to acknowledge that part of making sure people understand and use the financial services market is to take away their fear factor of products. Retirement income products therefore have to be:

• Simple – straight-forward products so that people know exactly what they are buying and how it could match their needs
• Accessible – so even those without access to financial advice are able to buy the most appropriate product for their needs
• Good value – so people will trust buying products and will get the best available return from their hard-earned pension savings.

5. Personal responsibility

“People need to take ownership of their retirement planning – from starting to save into a pension pot when they are in their 20s and 30s, to making the best retirement income decision when they retire.”

Often people are left with little choice at retirement, and don’t receive the retirement income they feel they need to maintain their lifestyle, because they have not saved enough through their working life. Hopefully, automatic enrolment will go a long way in encouraging people to kick-start their pension saving habit, but industry and government need to do more to encourage people to stick with the habit and to save more than 8% of their earnings.

People approaching retirement need to take a fuller role in choosing the right retirement income product for them, rather than just taking the standard annuity from their pension provider.

This means considering which retirement income product best meets their needs. If they decide to buy an annuity, people need to consider the best shape (for example whether a partner’s pension is also needed and whether it should increase each year in value to try and keep up with inflation), and shop around for the best rates, taking into account if their health qualifies them for an enhanced annuity.

For the complete Retirement Nation report please download Our Retirement Nation 2011 (1.9mb)

For the Executive summary please read more here

Go back to the Retirement Nation homepage here