Talking ’bout the next pension generation seems to be on hold

Maybe Roger Daltry had it right when he sang: “I hope I die before I get old” - anyone trying to navigate their way through the myriad of pension reforms might well agree.

Picture: PA

But one unwelcome outcome of these reforms is they are deterring people from saving for their retirement and a worrying 40 per cent of people in Yorkshire say they don’t have a long term financial plan.

Research by wealth manager Towry shows that 26 per cent of people in Yorkshire said they were put off retirement saving due to repeated legislative changes, while only 56 per cent said they fully understood the implications of recent and ongoing pension reforms.

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More than half of those earning over £30,000 said the constant tinkering to pensions makes retirement planing difficult.

It’s not just Mr Daltry’s generation who should be worried. Pensions advisers say that unless we start preparing for our retirement in our 20s, we will be in trouble further down the line.

Towry said that changes to legislation affecting pensions, savings and investments are derailing the financial aspirations of consumers across Yorkshire, creating a culture of apathy towards financial planning.

The survey of 2​,​000 people earning over £30,000 ​claimed that 29​ per cent​ s​aid the reforms had left them less confident in their retirement plans.

​Importantly, over a quarter said they ​a​re not saving as much for retirement as they could because of fears about further changes to the pension system, thus exacerbating the growing deficit between what people require in retirement versus their projected pension pot based on current savings.

Andy James, head of retirement planning at Towry, said, “These figures clearly highlight some unwelcome side effects of the recent pensions innovations, which are leaving many savers in Yorkshire and the Humber far less assured about their financial plans.

“Whilst in principle these changes are welcomed and provide savers with greater freedoms, it’s clear that more choice is only a good thing when the implications are fully explained.​“

He added that the constant tinkering with the rules does little to instil confidence​ among those starting to save for retirement. Many worry that the rules will have change again.

He warned that this will lead to​ greater uncertainty and a reluctance​ among people​ to commit their hard earned cash.

“What is needed now is a prolonged period of stability, to allow savers to build their understanding of how the new framework impacts them​,” he said​.

​“​Only then can we start to address the culture of apathy that has developed and start to re-engage the nation on the importance of financial planning.”

Mr James believes that despite their complexity, the new pension freedoms are a lot more flexible.

“There are a lot more options to be tax savvy with your pension and other assets,” he said.

“Think about what allowances you’ve got - your personal allowance and tax free pension. Lock your pension in with other investments like ISAs. Being tax efficient can make money last a lot longer. You don’t want to give it to the Government.”

So if you’re not sure what to do next, a good place to start is the Personal Finance Society website, whose members are qualified, and you can click on a link to find a local adviser who specialises in retirement planning.

The vast majority will give you your first meeting at their expense rather than yours.

“They will give you an idea of costs and you can get an idea whether they are worth paying,” said Mr James.

For those worried about ethics, an adviser has to tell you what the cost is and will break down the charge.

It’s a much better option than Mr Daltry’s.