The April 2015 ‘pension freedoms’ represent an historic change, breaking with the so-called ‘annuities deal’ that has provided the basis of UK pension policy since the Finance Act of 1921.
However, policymakers have lacked detailed quantitative evidence on the financial capability of Defined Contribution (DC) pension savers approaching retirement, and on how financial capability changes through later life.
This research, which analysed data from Wave 3 of the Wealth and Assets Survey (WAS), found:
- Limited experience of financial products among DC savers approaching retirement, with one quarter of this group possessing neither a savings account nor an ISA;
- An age-related ‘liquidity bias‘, with the amount individuals have in their current account increasing in older age groups, even as levels of financial wealth decline;
- Low levels of financial engagement – such as monitoring financial ‘best-buy’ tables – among DC savers, with engagement levels declining steadily with age.
The research has been authored by the Strategic Society Centre in partnership with NatCen Social Research, and has been made possible by the support of the Joseph Rowntree Foundation (JRF).
You can download a copy of the research here: Defined Capability: Pensions, financial capabiltiy and decision-making among retirees
Authors: James Lloyd (Strategic Society Centre), Chris Lord (NatCen Social Research)