Aviva has started running dedicated retirement preparation seminars for its clients. Having attended one, James Phillips explains how the sessions are run.
How long does it take to give the future retiree enough of the basic information they need to really start thinking about how to fund their retirement?
It is a difficult question to answer and obviously depends on the understanding or provision the saver already has.
Yet, Aviva is holding three-hour financial education sessions with its clients, bringing them in to hear what they already know and what their current thinking is, and to help them get their knowledge up to scratch.
At one such session of 12 people - 10 men and two women - Aviva's financial education development manager Laura Stewart-Smith and financial adviser Dean Gillam sought to get people to think about the wide range of, sometimes complex, decisions they will need to make before and in retirement - both financially and socially.
The session started with Aviva asking the future retirees what they were looking forward to in retirement, and what their concerns would be. Looming large were worries about not having enough money, particularly if they have to fund unexpected health problems, but there were also concerns that leaving work would cause them to lose their identity, while their motivation would drop.
And while they expected to enjoy the ability to plan their own life, with an abundance of cruise ship holidays, they also felt they would be unable to fill the time - especially when Aviva noted relationship dynamics could suffer with the number of divorces among over-60s rising by 75% over the last 20 years.
Speaking to attendees, Gillam noted this social aspect could be more difficult. Knowing you have enough money and how you will spend it will aid this, however.
"That lifestyle piece is far more challenging than any of the financial stuff," he said. "Finance is black and white; there are ways of ironing out inefficiencies and once you have the knowledge and understanding, it is quite straightforward.
"That lifestyle piece is more difficult for people to adjust to and get acclimatised to."
Based on this, these savers were asked if there was a "right time" to retire. Inevitably the responses were varied: as soon as possible, when you are ready, or when you can afford to do so. Above all, it is important to balance ability versus desire.
Attendees were encouraged to think about how they could supplement that income, with answers ranging from part-time work to letting out their gardens as a dog kennel.
Yet, it was clearly demonstrated that financial education is absolutely necessary to help savers make informed decisions about their retirement.
When Aviva ran through income options, some had to be told about the need to apply for the state pension to receive it, while an explanation of inflation was needed and, when asked what the key risks to retirement incomes were, no attendees mentioned the risk of outliving their funds.
Speaking after the session, Stuart-Smith said this was not surprising, with the provider's previous sessions yielding a "variety of knowledge".
"The good thing about these sessions is we give people that opportunity to see what they know, so if it that is not right we give them the opportunity to relearn. I think pensions awareness needs to improve across all ages."
Of course, this is the point of the session and many areas such as tax implications, perhaps one of the most difficult, were explained as simply and concisely as Aviva could, while not omitting important details.
The lifetime allowance was described as "the cumulative value of your pensions that you are permitted to have available to you", while drawdown "allows us to split our defined contribution pension pots into two elements: a tax-free cash component, and a taxable element". The progressive tax system was also defined simply.
And savers were reminded that with the full state pension "you are using £8,500 of your personal tax allowance straight away", while there is no reason why savers could not access a mix of tax-free cash, annuities and drawdown.
"It comes back down to what's right for you," Stewart-Smith said, although she did add they may have to change providers to access some of the options.
Interestingly, throughout the session Aviva used the perhaps overly-complex names for retirement products, taxes, and allowances - something others may frown at.
For example, attendees were confronted with the terms and acronyms: uncrystallised funds pension lump sum (UFPLS); money purchase annual allowance (MPAA); and flexi-access drawdown (FAD).
Aviva recognised the complexity and potential confusion that may arise from these terms, but argued that, while the jargon exists, it is important that they help savers get accustomed to it, only so they know what they are looking at.
Indeed, client relationship director Andy Bagnall said: "Elsewhere in financial education, some of the consultants will use alternative terms, but if you don't use those terms now we are almost doing savers a disservice. Whether or not we like it, the jargon is here."
It was impossible for Aviva to cover all ground in a three-hour session, but the information given will certainly give attendees the opportunity to consider their options in a more informed way.
Nevertheless, as often reiterated during the session, individual circumstances are key and personal financial advice - from Aviva, an independent financial adviser, Pension Wise, or The Pensions Advisory Service - may be the best route to get the outcome that would be right for them.
Aviva has booked in another 18 days' worth of sessions, with a total of 720 slots available, over the remainder of 2018, and it is clear they are appreciated.
One attendee recommended the "really fantastic seminar" to others, adding: "Although I understand pensions quite well, copying with the lifestyle changes was not thought out thoroughly".
Every attendee at this particular session said they found the presentation "professional and clear", liked the format, "feel better informed", and would recommend the session to others.
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