At the same time, half this population also said they felt stressed or anxious about their current financial situation (53 per cent), and they worried that their pension savings would not last their full lifetime in retirement (52 per cent).
Claire Altman, managing director – individual retirement at Standard Life, says: "The ongoing economic uncertainty has undoubtedly had a significant impact on consumer behaviour. And the changes we’re seeing not only apply to here and now, but also to what people want in retirement."
According to Kirsty Anderson, pensions specialist at M&G Wealth, amid all this volatility, by far and away the biggest concern for clients remains, ‘Will my money last?’ and, ‘Will I have enough in retirement?’
Anderson says: “On the drawdown side this of course means more planning for financial advisers, going through various scenarios with their client to ensure they understand the impact market volatility may have on their savings, particularly for clients who have experienced downward market movement in the early years of withdrawing an income.
“With both equities and fixed interest experience showing negative movement in 2022, it’s easy to understand why consumers are concerned, and the knock-on impact this has for advisers in explaining and in many cases educating clients in this area.
“For those clients who have realised they want to take less risk with their pension savings, the current rates for guaranteed income, such as annuities, are relatively attractive at the moment and will provide reassurance for those who are becoming more cautious.”
The short-term impact on pensions, particularly defined contribution pensions, is that existing pots will have likely seen reduced values.
However, as Dominic James Murray, chief executive of Cameron James, says, it is essential for investors and retirees alike to remember that change is constant but that historically, equities have always prevailed as the main asset class to grow retirement funds.
He adds: “There are always ongoing challenges in the financial landscape. For example, currently high interest rates, an energy crisis, geopolitical tensions like the war in Ukraine, the pandemic aftermath, and now events in Israel. However, when was the last time that the financial landscape was flat or uneventful?
“And if you are planning to draw down your pot over 20 years, or even pass to your beneficiaries, then there is no need to panic.”
With the increase in interest rates, annuities are at an increased level.
With gilt yields falling this has lead to an increase in annuity rates. As a result it is becoming a far more attractive proposition than it has been in the past 10 years.
