Research by the new website www.six-steps.org, (part of Aviva, the savings, investment and insurance group) reveals that a third of Brits (32%) delay their retirement plans because they don't understand the jargon.
- 'It will never happen to me'
- 'I never really think about my pension or saving for retirement'
- 'I don't understand retirement and its issues'
- 'I think it is boring'
Research1 by the new website www.six-steps.org, (part of Aviva, the savings, investment and insurance group) reveals that a third of Brits (32%) delay their retirement plans because they don't understand the jargon. To help provide a solution to this problem, www.six-steps.org has been launched to offer people access to a jargon-free, unbiased planning resource to enable them to make informed financial decisions for retirement.
The research shows that a fifth (20%) of Brits think retirement is too far off to worry about now and 14% haven't thought about their future at all yet. As a result two thirds (65%) do not feel financially prepared for retirement.
As many as 14 million2 (32%) Brits are putting off their retirement plans because they are discouraged by financial jargon. Almost a quarter (24%) of Brits have admitted to not understanding financial terms such as NPSS or annuity3, with a further 17% admitting they don't understand the subject of retirement and its associated issues.
It seems men are more confident that they understand financial terms with twice as many men (21%) saying they have a good understanding compared to just 11% of women. As a consequence, financial jargon is more likely to put women off from finding out more information about planning for their retirement - 34% of women compared to 29% of men.
Other excuses for not planning ahead for retirement include:
- 'It-will-never-happen-to-me'
One in two (48%) adults under 30 years old think planning for retirement is not worth worrying about because it is too far away. - Retirement is boring
1.7 million4 Brits (4%) think retirement issues are boring - 'The Ostrich effect': bury your head in the sand
14% admit to never really thinking about their pension or saving for retirement
Lynne Gray, Director of Corporate Communications, Aviva plc, says: "It is concerning to see that so many are making excuses that could effectively put their future on hold. Burying your head in the sand, being frustrated by financial literature or worse still being apathetic about your finances will leave you feeling financially underprepared and worried about your retirement. It is important for people to realise that there is advice out there on retirement planning that is easy-to-use and jargon-free."
Life's distractions
Distracted by the here and now, many Brits prefer to prioritise the more immediate issues they face. When thinking of the most important financial hurdles in their life, most Brits rank planning for their retirement only fourth most important, after buying a car (1st), booking a holiday (2nd) or buying or renovating a house (3rd).
Lynne Gray continues: "The UK is gripped by a short term approach that needs balancing out. Essentially, Brits tend to prioritise saving for two weeks in the sun rather than thinking about how they are going to fund 30 odd years in retirement."
Short-termism is particularly prevalent in those aged between 18 - 29 years with half (48%) in this age range believing that retirement is not worth worrying about as it is so far away. This compares to 15% in the 30 - 50 year group and an unsurprisingly 1% in the over 50s.
Lynne Gray concludes: "We recognise that there is a gap in financial literacy and apathy towards retirement planning and with the launch of www.six-steps.org we have made inroads to help improve the situation. We want people to feel confident about their financial future and so through www.six-steps.org we offer an unbiased financial planning resource, free from jargon with the aim of helping people to start making informed decisions for their retirement."
The Economic Secretary to the Treasury, Ed Balls, said: "We want everyone in society to have access to, and use, financial services with confidence. Financial decisions can be difficult. Financial products are complicated and there can be too much jargon. This puts people off, or they can end up buying something that is not right for them. Sometimes people just want to discuss their financial options and not buy anything. We believe there is a gap in the provision of this last type of advice - generic advice - and we are pleased to see Six-steps.org playing a role in this area."
For further information on how to plan for retirement and the Six-Steps retirement planner tool people can visit www.six-steps.org.
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For further information, please contact:
Lansons Communications
Joe Laing/Aisling McCarthy
tel: 020 7294 3649/0207 294 3633
e-mail: joel@lansons.com/aislingm@lansons.com
Notes to editors
1. Six-Steps.org research conducted by YouGov from 24 to 26 January 2007. This is based on a sample size of 2,679 UK adults (aged 18+)
2. Source: Number of adult population = 44,200,000 (source: YouGov, Nov 2006). 32% (from research -see note 1) of 44,200,000 is 14,144,000.
3. NPSS: Under the current proposals this is envisaged to be a Government sponsored Money Purchase type pension scheme, into which people not in a workplace pension would be automatically enrolled. Employees will contribute 4% of their salary, their employers 3% and the Government 1%. The benefits accrued within NPSS would be paid in the form of an annuity (see definition).
Annuity: A series of payments, most commonly paid until the end of a specified period or the death of the recipient.
4. Source: Number of adult population = 44,200,000 (source: YouGov, Nov 2006). 4% (from research - see note 1) of 44,200,000 is 1,768,000
About Six-Steps
Six-Steps is a free, unbiased financial planning resource dedicated to helping people make informed financial decisions for retirement.
This UK-focused site is the first Six-Steps site to launch; further sites will follow for other countries.
Six-Steps is produced by Aviva plc, the world's fifth-largest insurance group and the biggest in the UK. Aviva is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its businesses include Norwich Union and RAC in the UK, Hibernian in Ireland, Delta Lloyd in the Netherlands and Commercial Union Polska in Poland.
Research carried out for Aviva shows that people around the world want help to feel confident about taking decisions about their financial future. Six-Steps helps to meet this need by providing straightforward, unbiased, personal finance information. Aviva will not offer financial services on this website and users' privacy is assured.