BlackRock: What can government & industry do to support people saving for retirement?

In 2015 BlackRock surveyed 4,000 UK savers on their approach to saving. We have drawn three key conclusions for the retirement market:

  • more than half of household assets are held in cash;
  • receiving professional advice drives willingness to think long-term and hence invest; and
  • the advice regime should be simplified to give people tools to plan their retirement effectively

Less than half of Britons have ever sought professional financial advice, which has a profound impact on their ability to accumulate the kind of wealth they need over the long term.

Many people still depend on the State for retirement support, particularly if they are self-employed. Given we are all living longer lives, this is not sustainable. We all need to invest more and save less, and start investing sooner, to meet our retirement goals. The nation’s policymakers should focus on equipping savers with the right tools to do this.

Managing a monthly budget while ensuring you are saving enough to meet ongoing lifetime needs, such as paying off debt or saving for a home, is no easy task, but greater saving won’t translate into greater investment unless accessing advice is made simpler. Individuals need engaging, consistent and standardised guidance to allow them to combine their sources of potential income and take informed decisions well in advance of retirement.

“Less than half of Britons have ever sought professional financial advice”

The development of low cost, simple, easy to access products that provide retirement solutions will further improve the savings landscape. Simple, cost-effective and transparent personal pensions can play a key role in developing a new culture that allows individuals to prepare, and take responsibility for, their own retirement.

These initiatives should be supported with a simplified guidance regime within which governments, regulators, industry and the charitable sector can provide a consistent set of core messages. Perhaps most fundamentally, investor protection must not be just a point-of-sale principle. Savers and their capital must be treated fairly throughout financial markets.

Finally, we should encourage pension funds to rediscover the benefits of investing in long-term assets such as infrastructure (including transport, renewable energies and digital networks), because they can help meet the liabilities of pension funds’ investments. They can provide diversification, stable cashflows, and a way to protect against inflation as they often provide inflation–linked returns. We have seen some initiatives in this area but more can be done to develop a stable and consistent regulatory environment for investment in these types of assets.

 

 

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Source: BlackRock Investor Pulse was conducted in association with Cicero Group between July and September 2015. A nationally representative sample of over 31,000 people in 20 countries was surveyed. They were aged between 25 and 74 years old. 4,000 were UK residents and, of this 4,000, 750 met the criterial for wealthy assets – having investable assets of more than £100,000 or an income greater than £100,000 as an individual or £150,000 as a household. The results of this survey are provided for information purposes only. The conclusions are intended to provide an indication of the current attitude of a sample of ‘wealthy investors’ in the UK to saving and investing and should not be relied upon for any other purposes.

Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: 020 7743 3000. Registered in England No. 2020394. For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited.

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Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. Reference to the names of each company mentioned in this communication is merely to explain the market background, and should not be construed as investment advice or investment recommendation of those companies.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

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