Pension Confusion Set to Leave Lawyers Unprepared for Retirement
07 Jul, 2016
- More than half of lawyers (58%) don’t understand the key features of a pension
- Three quarters of lawyers (72%) don’t know how much to set aside for a comfortable life in retirement
- The amount of money lawyers expect to need in retirement has risen since 2014 – from £35,678* to £36,852
- A quarter (25%) incorrectly believe they can take their full pension fund at any time, completely tax free.
Lawyers are still left confused by pensions with more than half not understanding their key features, and almost three quarters (72%) not knowing how much to save each month, according to new research by Wesleyan the specialist financial mutual.
One in four (25%) incorrectly believe they can withdraw their full pension fund, tax free, at any time, while the amount they believe they will need each year in retirement has risen by £1,174 from £35,678 in 2014* to £36,852 in 2016.
Vicki Wentworth, Chief Customer and Strategy Officer at Wesleyan, said: “It is very hard for a busy lawyer, with all the pressures that come with the job, to free up the time to frequently review their plans for retirement.
“As a result, there is clearly still some confusion around what pensions are there to do and how they can help you plan for the future, but proper planning is essential to help us enjoy the standard of living we dream of in retirement.”
Even the widespread publicity about pensions in the past year has had a limited impact, with only a third of lawyers (31%) saying it prompted them to do any research about their pension over the last twelve months. Meanwhile, one in eight (13%) have no intention of researching their retirement plans in the next 12 months, suggesting those in the dark will remain confused about what lies ahead.
The research also found that more than two thirds (71%) of lawyers are unaware how much the government contributes for every pound invested in a pension.
More than three quarters (78%) don’t understand the pension freedom reforms put in place last spring despite the extensive publicity surrounding their introduction more than a year ago.
Overall, one in four (25%) lawyers incorrectly believe the reforms mean you people can withdraw your their full pension fund at any time, completely tax free. More than a quarter (26%) believe it is only possible to take a sum from a defined contribution pension after retirement.
Vicki added: “It is hard to plan for retirement if you don’t fully understand the options available to you and what you can actually do with your savings – our research shows most lawyers sadly don’t understand.
“How much lawyers need in retirement depends on their own circumstances and needs, but what is clear is that many lawyers have an idea of what they would like to have after they finish work, but don’t understand enough about pensions to make effective plans to achieve it.
“Given the amount of publicity that has surrounded the major pensions during the past year, we would expect to see lawyers begin to plan earlier for retirement, but our insight tells us that this isn’t the case and that lawyers are still uncertain about what action to take.
“Fortunately, knowledgeable, credible, expert advice can help to get people’s retirement plans back in good health.”
Wesleyan specialises in providing specialist financial advice and services to doctors, dentists, lawyers and teachers.
Research based on a survey of 100 lawyers by Censuswide on behalf of Wesleyan, February 2016
*Research based on a survey of 100 lawyers by Censuswide on behalf of Wesleyan, February 2014