Industry Voice: Retirement has changed - What's shaping the future?

clock • 3 min read
Industry Voice: Retirement has changed - What's shaping the future?

The way people take money from their pension has changed, so we now need to pay as much attention to the spending phase as we do to the saving phase. What are we doing to turn pensions into a complete retirement strategy?

Retirement for working people will probably look very different to the retirement of their parents and grandparents.

Back in the day, many people retired with either a final salary scheme or an annuity. Either way, they didn't have to think about what to do with their pension when they retired. It simply began to pay out every month - there was no proliferation of options, no difficult choices, no head-scratching conundrums to think about.

Retirees are unprepared for the decisions they must make

For many of those considering retirement, their pension is a mystery. People have been encouraged to save for their retirement, throughout their working lives, paying little attention to the choices they need to make about what to do with that money when they retire. 

In an ideal world, everyone making decisions about their pension would speak to a financial adviser first. But our research found only one in four would be willing to pay for financial advice. Instead, they prefer to look to their pension provider for guidance.

And it's a big decision with many factors to consider, from how much income they need to how long they need their pension funds to last, and where they should invest. This has created even more confusion among an already overwhelmed audience.

Making sure you have enough money to see you through your retirement requires a level of planning and it's clear that we're storing up problems for the future unless we change our approach to retirement.

As an industry, it's up to us to educate and help pension members make the right choices when they come to take money from their pension pot. Until now, most providers have focused on providing information to retirees and leaving them to make their own decisions.

How you spend it is as important as saving it

If people know anything about their pension, it's simply that they must pay into it. But what happens when they reach an age where they can take the money out is often shrouded in mystery.

At Aviva, we believe we need to introduce a complete approach to retirement strategy, so we're not leaving unprepared members to make difficult retirement decisions.

We need to be treating pensions as one journey - aligning the saving phase to the spending phase.

Aviva is working harder to help members understand what they will need to do, and when, to make the right choices for their personal circumstances.

What are we doing about it?

At Aviva, we believe traditional pension investment and income models are already outdated. As an industry we must develop workable solutions for the future. And that's what we're doing.

We're currently working with our research partners to find out:

  • what people think about retirement
  • their financial needs during this stage of their lives
  • what they need from their pension provider.

Our findings will help us develop a complete retirement strategy for pension members that aligns the saving phase to the spending phase.

We're designing a product with options and strategies to guide people through the process of funding their retirement.

Creating a solution that includes:

  • potential for investment returns
  • reliable protection against longevity risk - particularly in later life
  • flexibility to adapt to changing requirements
  • simplicity in implementation and communication of outcomes. 



This post is funded by Aviva Guided Pensions



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