This week, Heather Hopkins (@heatherahopkins), Research Director at Platforum, muses about change: consumers embracing pension change and changing retirement savings behaviour for good.
Hold on to your spreadsheets, we’re in for a lucrative ride!
This week we published a report based on research with working adults and active investors exploring consumer reaction to the recent pension changes. We examined the views of these individuals and how they expect to fund their lives in retirement.
We chose to title the report Embracing Change because people have overwhelmingly embraced the pension reforms. Most working adults (and just about all investors) are aware of the reforms, and a large group (32% of active investors) are “quite excited” about the changes and follow developments with interest. Strikingly, half of working adults and three-quarters of investors say they will increase savings for retirement because of the changes – although we always take stated intended behaviour with a pinch of salt!
At this rate, George Osborne’s Budget may reach the top of the TV ratings –it promises to hold even more news on pensions.
We find the engagement with the reforms surprising, and indeed heartening. While we love to talk about investment trusts, ETFs and active versus passive management over a G&T, that is not everyone’s cup of tea. Even active investors have been telling us for years that they prefer to spend as little time and energy managing investments as possible.
The key point is this: the pension reforms are a massive marketing opportunity!
The data suggest that the market is primed to change in unpredictable ways, with new winners and losers.
However, at Platforum we remain concerned about how much working adults plan to rely on state pensions. People expect to depend first on workplace retirement savings and second on the state pension for their retirement income. We aren’t expecting major changes to the state pension in next week’s Budget; it produces a paltry income for most retirees and we expect that in time the income will decrease further. And though property does figure in the retirement mix, it is not the most or second most important source of income.
Younger workers, the much-sought-after “millennials”, are less likely to expect to receive a state pension than older workers. While 54% of “core accumulators” (workers aged 55-64) expect to draw an income from the state pension, only 32% of working millenials (workers aged 22-34) expect the same. That’s extraordinary. And offers a very interesting market opportunity to those who can crack it.
We at Platforum hope that you, our readers, are embracing of change as well. This is because we are launching a new website next week. Keep an eye out as we will be posting an infographic comparing results from our survey between millennials and core-accumulators as well as other snipits from our research.
Whether you plan to draw a state pension or not, enjoy a sunny weekend.