Over half (51%) of those approaching retirement admit they find pensions confusing. The majority (88%) of Scots find finance complex. A quarter of over 55s in Scotland distrust the financial services industry.
For many Scots the process of purchasing a financial product is a step into the unknown. New research* from Age Scotland Enterprises, the commercial services arm of the charity, finds that as annuity sales continue to fall, over a third (35%) of over 55s admit they struggle to understand how annuities work. More broadly, over a quarter (26%) of later life consumers confess they find pensions difficult to understand.
Only 16% of Scots welcome the changes to pensions introduced at the Budget (compared to 20% of the whole of the UK) and many people across all ages have a limited understanding of how the changes will impact them. Of those aged 45-54 there is even greater confusion; almost half (44%) find annuities difficult to understand, and worryingly half (51%) admit to not fully understanding pensions, which could prove problematic for them when it comes to planning for retirement.
The Age Scotland Enterprises research also revealed that nine tenths (88%) of Scottish consumers find the financial services industry so complex they struggle to understand many of the products they already have, and those on offer to them, with only a tenth (8%) feeling very financially savvy.
When asked about what is preventing them from improving their financial understanding, a fifth (20%) of over 55s identified the language used to describe financial products as being too confusing. When looking for personal finance advice, the internet is the first port of call for 31% and 20% would ask a family member or a friend. Less than a tenth (9%) of Scottish consumers would turn to their bank or financial provider when they are struggling to understand a financial product.
One of the biggest challenges facing providers is the lack of trust that consumers have in the financial services industry. Those aged 55 and over displayed the least trust, with a quarter (24%) admitting that this is the biggest barrier they face when it comes to dealing with their finances.
Logan Steele, General Manager of Age Scotland Enterprises, said: “While many people have welcomed changes to the pensions industry and more of us are saving for the future through auto-enrolment, it is very worrying to find that so many are unsure about the financial products available to them, especially those approaching retirement. Taking control of your finances whatever your age, and especially at retirement, is vital but can only be achieved if people understand the financial services products they have, and those on offer to them.
Please see the Age UK Annuity Jargon Buster webpage for more help as well as links to other organisations who can assist at: