Smart has launched a retirement product in a bid to help guide members and bridge the advice gap.
The product - Smart Retire - aims to give members flexibility to plan and manage retirement savings in a personalised way either with guidance or in conjunction with advice from a professional.
It will initially be available to members of the UK Smart Pension master trust but is expected to roll out globally in 2021.
The product allows users to scenario plan and change their pension strategy as required and has been built with four pots in a bid to accommodate life's unpredictability and ensure that users avoid both under-spending and running out of funds in their retirement.
Of the four pots, two are income pots:
- Flexible income pot - monthly income in the early years of retirement
- Later life pot - leave money invested to buy a guaranteed income from an annuity provider later on in retirement
And two are savings pots:
- Rainy day pot - dip into this pot for emergencies
- Inheritance pot - put money aside to leave to a loved one
It is based on a prototype model it created and unveiled with Legal & General in 2018.
Smart global managing director Will Wynne said: "Retirement is complex and people need help if they are to make the most of their savings. That's why we've invested hundreds of hours testing and refining our new Smart Retire solution which gives people flexibility, puts people in control, but also helps them balance the important decisions to ensure they are using their money in the right way."
The launch comes as YouGov research conducted on behalf of Smart, which polled 2,114 people in November, suggested that one in eight adults (13%) over the age of 55 who expect to retire in the future were planning on delaying their retirement due to the Covid-19 pandemic.
The research also suggested that only a fifth (20%) of UK adults saw retirement as a one-off event, and over a third (35%) of UK adults who expected to retire or were already retired would prefer to manage all their retirement finances themselves.
Half (51%) of people aged 55+ said they thought of retirement as an event with several stages, a statistic which was backed up with people having very different expectations for when they will retire. Looking at the UK adults aged 55+ who expect to retire in the future:
- 25% saying they will or did first access their retirement savings between 50 and 59
- 33% say they will or did first access their retirement savings between 60 and 64
- 33% say they will or did first access their retirement savings between 65 and 69
- 5% say they will or did first access their retirement savings between 70 and 74
- 2% say they will or did first access their retirement savings between 75-79
Furthermore, 7% of UK adults aged 55+ who expected to retire or were retired, didn't know their preference regarding managing finances during retirement and 20% didn't understand their options around finance at retirement.
Despite all of this Smart research suggested people aged 55+ want control and flexibility:
- 47% of UK adults aged 55+ who expected to retire or are retired would prefer to manage all of their retirement finances themselves
- But 37% wanted some support; 7% wanted someone else to manage their retirement finances entirely, while 30% wanted some assistance but to remain involved.
- When asked what was important when choosing a pension provider, 27% of all UK adults aged 55+ chose being able to change their income if their financial needs changed, and 29% placed importance on having the ability to withdraw ah-hoc lump sums
Some 52% of all UK adults were also concerned about only being able to afford a limited lifestyle in retirement, while 13% of those aged 55+ who expected to retire in the future, had decided to delay their retirement due to the Covid pandemic.
Wynne added: "While the headline impact of Covid is shocking news for a million people approaching retirement in the UK. This survey demonstrates that the nature of retirement is changing and fast. We know people want to be in control of their finances, but worryingly 47% of adults aged 55+ who expect to retire or are already retired, want to go it alone."
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