It’s an enormous privilege to be entrusted with the pension savings of almost 250,000 customers.

    In these turbulent times, and with us all living longer, it’s more important than ever that we plan and prepare for the increasing levels of income we’ll need in retirement.

    However, we know all too well that not enough people have pensions, let alone engage with them or save enough to ensure they have financial security in later life. 

    Our purpose is to help make retirement more rewarding

    This is something that we know is also at the heart of what advisers work hard to achieve for their clients. 

    And to do that, we all need to deepen our understanding of how people feel about retirement and their financial position. What influences their decisions, what makes them feel more confident, and how can we as an industry better engage with people, through advisers and planners, to help ensure they benefit from the best possible outcomes? 

    These issues are what have inspired the Nucleus UK Retirement Confidence Index, the first study of its kind, involving more than 2,000 UK adults over 50 nearing or in retirement.

    We wanted to create an objective measure that can be tracked over time, with tangible actions that we as an industry can put in place to effect meaningful change. The index is based on the responses to the central question of how confident people feel about having enough money to live on for the rest of their lives. 

    The headline score of the index is 6.9 out of 10 with a negative outlook. The score is higher than many might have predicted, though the report has unearthed many more findings that point to some of the challenges facing some groups who feel less confident about their financial stability in later life.

    The current negative outlook reflects the sharp decline of defined benefit (DB) pension schemes and inadequate defined contribution (DC) savings pots.

    We believe retirement confidence is highly likely to diminish further over time as household budgets continue to be stretched and more people are impacted by the cost-of-living crisis.

    Then we have the advice gap, with only a minority of consumers accessing the services of regulated financial advice, which we know is often a positively life changing relationship.

    On the surface, people seem relatively buoyant

    Two thirds report being ‘confident’ they will have enough to retire comfortably. However only 16% are ‘totally confident’.

    The concern in some of the groups, particularly those who respondents who are not advised, is whether their high confidence levels are exaggerated or misplaced – after all, people don’t know what they don’t know. This is an area we’ll dig into a bit more next time we conduct the research. Effective pension saving can be technical with issues like tax and using the best vehicles to maximise contributions. People need support.

    The role of planning

    One of the most interesting findings of the index is how vital planning is to improving confidence levels. Just over half of respondents (51%) said they have a detailed plan for retirement. Only 20% have their plan in writing, but this doesn’t seem to affect their high levels of confidence (8.1 vs 8.0). However, the remaining 49% of people who don’t have a plan in place are significantly less confident they will have enough money to last them for the rest of their life. Those who said they have no idea, or not thought about planning displayed the lowest level of confidence (4.6) in the survey.

    It's also interesting to see that advice itself does not seem to have a material impact on people’s confidence, though it is slightly higher for advised customers (7.0) compared to those who have never taken advice (6.8). Based on this revelation, do we need to reconsider how we look at the advice gap, which to date is where the focus has been. Planning clearly matters, so is there an opportunity to engage customers via the planning process, which itself can pave the way for regulated advice if it is needed?

    It’s crucial now that having invested in such a comprehensive study, that we take the findings and see how we as an industry can convince more people to save into their pensions; to better understand why they are saving and what for; and to empower them to do so in an environment of trust and stability. And we all need to champion the value of planning and advice.

    At Nucleus, we’re committed to actions such as improving our communications to make them more engaging and accessible, and investing further in our systems and technology to help improve the movement of funds to benefit customers. We’ll continue to push for progress on the pensions dashboard to help people plan and make more informed decisions about their futures.

    We all have a role to play and we urge everybody to collaborate and deliver on these to boost the confidence levels and quality of life for every UK retiree.

    You can explore the findings from the index here.

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