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Pension confusion set to leave most Yorkshire residents unprepared for retirement

People in Yorkshire are still being left confused by pensions, with more than half (56%) not understanding their key features, according to new research by Wesleyan.

The research conducted by the specialist financial mutual revealed how much confusion there still is among most Yorkshire's residents when it comes to their retirement planning. Four fifths (79%) don't understand the pension freedom reforms put in place last spring.

Overall, almost a tenth (9%) of people in Yorkshire incorrectly believe the reforms mean you can withdraw your full pension fund at any time, completely tax free. While nearly one in eight (12%) believe you can only take a sum of your defined contribution pension once you retire.

The research also showed Yorkshire's residents expect to need an average of £21,848 a year in retirement - significantly more than the actual average UK pension income*, leaving a potentially very large funding gap for the average retiree.

As the government introduces the Lifetime ISA to encourage saving for retirement, it is clear many in the region still do not understand how much to save each month for the future, with nearly three quarters of people (72%) saying they don't know how much they should be putting into a pension pot.

Vicki Wentworth, Chief Customer and Strategy Officer at Wesleyan, said: "Our research shows how important it is for Yorkshire's residents to get proper advice to ensure they reach their retirement goals.

"How much people need in retirement depends on their own circumstances and needs, but what is clear is that many Yorkshire people have an idea of what they would like to have in retirement, but aren't planning early or effectively enough to achieve it.

"Given the amount of publicity that has surrounded the major pension reforms introduced last year, we would expect to see people begin to plan earlier for retirement, although our insight tells us that doesn't seem to be happening yet. While the regulation may have intended to make planning for retirement simpler and more flexible, in reality it appears people are still confused.

Almost half (47%) have no intention of researching their retirement plans in the next 12 months either, suggesting those in the dark will remain confused about what lies ahead.

The research also found that two thirds (64%) of people in Yorkshire are unaware they could get upwards of 25p from the government for every pound invested in a pension.

Vicki added: "For people to enjoy the standard of living they dream of in retirement, it's imperative they not only plan their finances now so that they can afford it, but continuously review those plans.

"If what we are hearing is true, that many Yorkshire residents have not started, nor do they intend to start, any research around what the pension reforms mean for them, then there is clearly a real and apparent need for knowledgeable, credible, expert advice."

Wesleyan, which specialises in providing specialist financial advice and services to doctors, dentists, lawyers and teachers, surveyed 1,015 people across the UK, with 81 from Yorkshire, about their knowledge of pensions, retirement planning and the new regulations brought in last year.

* Prudential Pension Research - Jan 2016

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Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

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