The Skipton Building Society has found that middle and high earners are most likely to believe that pension reforms have made it easier to save for retirement.
In one of the first assessments of public views of the new Lifetime ISA since it was announced in the March Budget, 46% of those with household earnings of more than £35,000 say that the new product will make it easier for under-40s to save for the lifestyle they want in retirement. Meanwhile, those with a household income of less than £20,000 are most likely to believe that the new product will make no difference (45% of respondents).
Among those under 40, middle and high earners are also the most likely to take advantage of the new savings programme. 49% of under-40s earning over £35,000 said they were likely to consider opening a Lifetime ISA, compared to 35% of those with a household income of less than £35,000.
Among those aged under 40 who said they were unlikely to consider a Lifetime ISA, 30% said that it was unattractive to them, while 15% said they already use other savings products.
“There have been numerous significant changes to the pensions system in recent years with the introduction of new products, programmes and freedoms,” said Jacqui Bateson, retirement spokesperson at Skipton Building Society.
“It’s important to stop and listen to the impact that these changes are having on the way people view retirement.
“Whether you feel optimistic or pessimistic, confused or clear, can have a significant effect on how you approach your retirement savings and the financial decisions you make.”
Skipton’s Index, which tracks sentiment towards retirement using a range of factors on a scale of one to 10 (with 10 being the most positive), remained largely unchanged since the first edition was published in November 2015. Sentiment among pre-retirees stood at 3.2, down from 3.3, while among retirees it was 6.0, down from 6.1.
However, the survey of over 3,000 British adults found that views of the impact of the savings and pensions reforms over the last three years are mixed. Significantly, retirees are more likely to feel that these recent changes have caused confusion about saving than those who are still working. 42% of retirees surveyed believe that the changes have made it more difficult for people to understand how to save for retirement. By contrast, just 26% of pre-retirees believe it is more difficult, and the figure falls to just 17% among those aged 18-35.
Middle and high earners are most likely to believe the reforms have helped to clarify how to save for retirement. 27% of those with a household income of more than £35,000 believe the government’s changes have made it easier to understand, while 35% believe they have made no difference.
“Our research shows that for younger people and middle earners, the government’s reforms have helped to provide much needed clarity about how to save for retirement,” said Bateson.
“However, this appears to be less true for older people. Those who had planned for retirement throughout their working lives under one system may feel particularly confused when that system ends suddenly. By contrast, younger people are more easily able to take steps to adapt by changing their plans now.”