The overwhelming majority of DC savers in the United Kingdom are uncertain how they intend to use their pension savings once they become available to them.
The AllianceBernstein survey of 1,000 DC pension savers above the age of 40 found that 78% have not decided how they plan to use their savings once they become available to them. The clear majority (57%) of those older than 55 don’t want to decide what to do until shortly before or just after retirement.
Of the minority that had decided, 41% want to keep it invested in a pension, 23% plan to put it into savings outside of a pension, 18% plan to buy an annuity, and 14% intend to spend it on purchases or pay off debt.
The survey also finds that only 9% of those approaching retirement (ages 55 to 64) know the exact day they plan to access their pension, with 79% narrowing it to a year or within a few years.
Furthermore, 78% of the total say it’s important that their pension investment strategy reflects this uncertainty around their retirement date.
Of the total respondents, 87% say it’s important that their pension investment gives them flexibility to decide how to use their savings.
“Engaging savers in the U.K. with decisions around pensions has always been a challenge, and these latest findings suggest that, even if savers could be engaged, they are unlikely to be in a position to take any clear decisions until very close to, or even after, retirement, and so flexibility is key,” says Chris Curry, director of the Pensions Policy Institute.
“These results highlight the importance of a pension investments strategy taking into account a number of uncertainties in members’ lives and not rushing them into making binding decisions that they are insufficiently prepared for,” adds David Hutchins, head of pensions strategy at AllianceBernstein. “We believe modern pension strategies require proactive investment management, robust governance focusing on members’ interests and the flexibility to fit around today’s working life.”
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