Low-income retirees, financial capability and pension choices
This research looks at low-income retirees with Defined Contribution pension savings. It examines how choices are being made on pensions and the implications for retirement income since changes were implemented in April 2015, allowing retirees to opt to draw down or cash in their pension pots. It also examined the impact of individuals’ financial capability.
The research found that:
- Financial capability was usually lower among low-income retirees;
- Use of saving and investment products among low-income retirees with a DC pension is limited, with 34 per cent possessing neither a savings account nor ISA; and
- There is evidence of low levels of financial capability which suggests a risk that the April 2015 changes to rules on DC pension savings will result in lower average retirement incomes and increasing pensioner poverty.