Phoenix Marketing International Reports That Fewer Than 40% Of UK Residents Age 55+ Are Financially Ready For Retirement and Few Expect A Significant Impact From Pensions

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Awareness of Pensions Freedom is higher among older UK residents, 40% of whom view complete access to their money purchase/defined contribution scheme as “Not at all attractive.” Further, younger residents are uncertain about investment options following Pensions Freedom and many anticipate financial challenges in their retirement

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Phoenix Marketing International, one of the top research companies in the U.S., released initial findings from its March 2015 study among 1,349 UK residents age 25+ with £15K+ in household income and £5K+ deposited or invested at any investment services company. Findings show that UK residents are in need of more information about Pensions Freedom and specifically investment options for their money purchase/defined contribution scheme. Alarming perhaps, is that less than one-third who are nearing retirement (age 55-64) are “financially well-prepared” and residents age 25 to 54 express many financial concerns.

Pensions Freedom began April 6, 2015 and allows UK residents over the age of 55 complete access to any pension fund that they have built up through a money purchase/defined contribution scheme. This change in regulation replaces a prior policy that typically required conversion of at least 75% of an accrued retirement “pot” into an annuity and allowed for up to 25% of the fund to be withdrawn tax-free. Uncertainty prevails regarding:

  • The level of awareness and knowledge of Pensions Freedom among UK residents;
  • The perceived attractiveness of this offering among key age groups;
  • The likely response to having broad fund access; and
  • Related attitudes towards financial preparation for and uncertainties with funding what could be many years of retirement.

The Phoenix study shows that awareness of Pensions Freedom is higher among UK residents age 55+. However, 40% of this group still report now having complete access to their retirement pot as “Not at all attractive.” Higher awareness of, and subsequent lower appeal for, Pensions Freedom is evident with increasing age. While less than one-quarter age 55 to 64 view Pensions Freedom at “Not at all attractive,” this sentiment is reported by more than half of those aged 65+.

With unfettered access to accrued pension savings, UK residents are faced with the dilemma of choosing how much of their fund to withdraw (if any) and how best to invest fund assets for income and growth. Neither is an easy decision, because the market is in need of education on post Pensions Freedom investment options and fund managers’ offerings. “Pensions Freedom creates a huge opportunity for UK investment funds to acquire new assets under management in their non-annuity fund securities,” claims Andrew Scott, Managing Director of the Phoenix London office. “The challenge,” Scott adds, “Is that fund managers need assistance with the design and evaluation of brand advertising that resonates well with UK residents and effectively promotes their investment offerings.”Also evident from the Phoenix study is that younger UK residents are nearly split on their need for obtaining professional advice following Pensions Freedom and 61% still plan to purchase an annuity, as they would have been obliged to prior to the Pensions Freedom Act.

Opting for a wait and see attitude is the likely near-term response among UK residents age 55+, implying that education on investment options and specific fund manager offerings are unmet needs. By the end of March 2015, two-thirds of older UK residents had yet to convert their pension scheme funds into an annuity and for many, holding off to learn more about their post Pensions Freedom options is the next step.

Click here to view representative quotes on what older UK residents say they might do in response to Pensions Freedom.

“In addition to identifying a need among UK residents for more information about Pensions Freedom and related investment options for their retirement pot, our study highlights that long-term solutions are needed to help prepare younger citizens for funding their retirement,” adds Andrew Scott. Fully one-third age 25 to 54 strongly agree that they are “Very concerned about having enough money to get by each day in my retirement” and about one-in-four anticipate “The overall quality of my life will be much lower in retirement than it is today.”

Among UK residents age 55+, those reporting they are financially prepared for retirement are older, while overall financial well-being in retirement is less certain among residents age 55 to 64. Of particular concern among UK residents nearing retirement is uncertainty as to what they should do to sufficiently fund their retirement, and only 14% agree that “Pensions Freedom will make a significant difference in my ability to be financially well-prepared for my retirement.”

So why was this study administered in the UK? The primary purpose for the Phoenix study was to finalize the design of two new research programs that will be offered by our London office. The first will be among retail banking consumers in the UK age 25+ and with £15K+ in annual household income. The second study will also be among UK residents age 25+ reporting annual household income of at least £15K, plus they will have at least £5K deposited or invested in one or more ISAs, mutual funds/bonds/stocks outside of an ISA account and employer-sponsored pension scheme, or have an online trading/brokerage account.

These new Phoenix programs will track UK investors’ impression and likelihood to consider such leading brands as Aberdeen Asset Management, Aegon, Alliance Trust, Allianz, Aviva, Axa, Baillie Gifford, Bank of Scotland, Barclays, Bestinvest, BlackRock, Charles Schwab, Charles Stanley, Citi / Citigroup, Close Brothers, Clydesdale Bank, Co Op / Co-operative Bank, Equiniti, Fidelity, First Direct, Forex Capital Markets, Friends Provident, Halifax, Hargreaves Lansdown, Henderson Global Investors, HSBC, ING, Interactive Investor, Invesco, Investec, JP Morgan, Jupiter, Legal & General, Lloyds, M&G, Merrill Lynch, MetLife, Morgan Stanley, Nationwide, NatWest, NS&I, Nutmeg, Old Mutual, Post Office, Provident, Prudential, Raymond James, RBS / Royal Bank of Scotland, Royal London, Saga, Sainsbury's Bank, Santander, Schroders, Scottish Windows, Skandia, Standard Chartered Bank, Standard Life, SunLife, TD Direct / TD Waterhouse, Tesco Bank, The Share Centre, Threadneedle Investments, TSB, UBS, Ulster Bank, Wealth Horizon, Wellesley, Yorkshire Bank, and Zurich.

For over a decade Phoenix Marketing International has provided top-tier financial services firms in Canada and the U.S. with guidance on the development of brand communications and media assessment programs. To that end, Phoenix manages numerous research programs designed to track competitive brand health, advertising performance, and the media effectiveness of new advertising campaigns and specific ad executions. Both UK programs are designed to answer the following strategic questions for clients:

  • Where your brand stands competitively in the mindset of qualified UK residents in terms of their awareness of and pre-disposition to your personal investment offerings.
  • Whether or not investors are motivated by your offerings and why.
  • How your current account holders perceive their relationship with your firm.
  • Capabilities investors report as most important when evaluating a potential firm for a new personal investment relationship and obstacles to switching from an existing relationship (e.g., inertia).
  • Your brand's relative strengths and weaknesses on critical factors needed to attract new accounts and your brand’s positioning among high-potential prospects, relative to your key competitors.
  • The importance and relevance of advertising for personal investment offerings via Digital/Online, Direct Mail, Out-Of-Home, Print, Radio, TV, and Web Site media.
  • An ROI “report card” on your in-market advertising, based on an assessment of the creative aspect of brand advertising and its impact on market consideration, will quantify how well your advertising: a) Achieves desired communication strategies/objectives; b) Enhances investors’ impression and consideration of your brand; and c) Provokes a specific market response to communicated message points.
  • Demographic profile of high-potential prospects who are aware of your brand and report a strong pre-disposition to open an investment account, including which of your advertising “hits the mark.”

Phoenix Marketing Contact:

Andrew Scott
Managing Director
London Office: +44 (0) 208 405 8819
Mobile: +44 (0) 7585 963837

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Kristin Johnson
Phoenix Marketing International
+1 845-876-8228 Ext: 308
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