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Pension confusion set to leave teachers unprepared for retirement

Pension confusion set to leave teachers unprepared for retirement

Teachers are still confused by pensions, with almost two thirds (61%) not understanding their key features, and 93% not sure how much to save each month, according to new research by Wesleyan, the specialist financial mutual.

One in twelve (8%) incorrectly believe they can withdraw their full pension fund at any time, completely tax free, while the amount they believe they will need each year in retirement has fallen from £26,389 in 2014 to £22,467 in 2016.

Vicki Wentworth, Chief Customer and Strategy Officer at Wesleyan, said: "It is hard for a busy teacher, with all the pressures that come with the job, to free up the time to frequently review retirement plans.

"As a result, there is clearly still some confusion around what pensions are there to do and how they can help you plan for the future, but proper planning is essential to help us enjoy the standard of living we dream of in retirement."

According to the findings, two fifths (40%) haven't done any research about pensions in the past year, meanwhile a third (34%) 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 three quarters (75%) of teachers are unaware how much the government contributes for every pound invested in a pension.

While they may not apply to all teachers, 70% don't understand the pension freedom reforms put in place last spring despite the extensive publicity surrounding their introduction more than a year ago.

Overall, one in twelve (8%) teachers incorrectly believe the reforms mean people can withdraw their full pension fund at any time, completely tax free. One in six (17%) believe it is only possible to take a sum from a defined contribution pension after retirement.

Vicki added: "It is hard to plan for retirement if you don't fully understand the options available to you and what you can actually do with your savings - our research shows most teachers sadly don't understand.

"How much teachers need in retirement depends on their own circumstances and needs, but what is clear is that many teachers have an idea of what they would like to have after they leave the classroom, but don't understand enough about pensions to make effective plans to achieve it.

"Given the amount of publicity that has surrounded pensions during the past year, we would expect to see teachers begin to plan earlier for retirement, but our insight tells us that isn't the case and that teachers are still uncertain about what action to take."

"Fortunately, knowledgeable, credible, expert advice can help to get people's retirement plans back in good health."

Wesleyan specialises in providing specialist financial advice and services to doctors, dentists, lawyers and teachers.

  • Research based on a survey of 210 teachers by Censuswide on behalf of Wesleyan, February 2016

(*Research based on a survey of 108 teachers by Censuswide on behalf of Wesleyan, February 2014).

Teachers puzzled by pensions (pdf)

'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

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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