Scots urged to act now to plug pension gap
And in many cases, they are overlooking the value of good financial advice – a move that could cost them thousands of pounds in the long run.
Now a call has gone out to anyone with pension savings to take advantage of good financial advice – or face the risk of paying dear in the future.
According to the Financial Conduct Authority even after a lifetime of saving, the average pension still only holds £67,897 of funds.
The figure is well short of the £250,000 pension pot that is generally considered enough to enable pensioners to enjoy a relatively comfortable retirement.
Meanwhile, many pension savers are dipping into their plans without taking any financial advice; according to the FCA, 48% access their funds without clear guidance from professionals on the impact.
The FCA data comes as new HM Revenue and Customs figures show the annual average contributions to pensions savings per individual has decreased by £200 – a 6.9% drop to £2,700 per year.
According to a spokesman for Edinburgh-based Best FA, which matches savers and investors to local teams of premier financial experts, concern is mounting that pension savers are unaware of the disparity between what they believe they had saved, and what their future income will be.
And those who fail to take the expert advice of financial experts may lose out significantly.
“People are walking blindly into their retirement and often don’t know exactly what their financial situation will be.
“They may not be fully aware of what standard of living their pension pot may provide, or even how much they need to enjoy that things in life they want.
“It’s been shown that those who take advice from a financial advisor go on to accumulate significantly better financial and pension wealth.
“By speaking to a financial advisor who understands their needs as early as possible, they can plan and prepare better for the future.”
Best FA provides an easy route to the best local financial advisors who can address individuals’ needs – whether it is a pension query, equity release, inheritance, mortgages or any other kind of financial issue.
The call to action comes as fresh data from the Pensions and Lifetime Savings Association which shows 51% of people focus on their current needs and wants at the expense of providing for the future.
The research shows just 23% of people are confident they know how much they need to save for their retirement. It has suggested savers consider the kind of retirement lifestyle they want and target their investments accordingly: for example, a single person will need around £10,000 a year to achieve just a minimum living standard, and £30,000 if they envisage a retirement of regular treats, holidays and outings.
Meanwhile, findings from the International Longevity Centre UK latest ‘Value of Financial Advice’ report have shown that people who received financial advice between 2001 and 2007 went on to accumulate “significantly more liquid financial assets and pension wealth” by 2012-14 than those who didn’t.
Its research suggested affluent savers who sought advice had up to £43,245 more in pension wealth and liquid financial assets than people of similar status who did not seek support and were more likely to invest in the equity market and save more.
Perhaps worryingly, the organisation’s research also showed a lax attitude to financial decisions, with just 16.8% of people seeking out an adviser in the years 2012-14.
Of those who took out an investment, nearly half failed to see a financial adviser beforehand.
Best FA was launched to help match individuals with the best fully FCA registered financial advisors to suit their needs. The online portal provides the option of online or face to face meetings, with an initial free of charge no-obligation financial consultation.
All Best FA advisors are FCA Regulation and provide an advice guarantee.
To find out more, visit www.bestfa.co.uk or call: 0131 564 0678