As Pensions Awareness Week brings the sector into focus, Georgina Taylor, Head of Multi-Asset Strategies (UK) at Invesco, comments on how to solve the challenge of engaging people with pensions to help them plan for retirement:
The personal nature of retirement planning presents the biggest challenge for engaging people with pensions because there is no one-size-fits-all solution. As an industry we have a clear responsibility to help everyone enjoy the retirement that they deserve, whether they manage their pension savings within a scheme, through an adviser or by pursuing a guided route.
Our responsibility not only lies in building investment solutions, but also in focusing on making pensions accessible so people can engage and see the impact that a change in behaviour can have on their future. This directly influences retirement outcomes through either a change in savings behaviour or through actively mapping out a clear retirement plan.
We believe that there are four crucial considerations for successful retirement planning and have developed a framework called ‘4-Life’ to address them. This framework allows individuals to clearly see the risks and opportunities associated with each part of retirement planning so that it is easier to assess whether they have the right tools in place to lay solid foundations for a comfortable retirement.
The 4-Life framework is based on allocating money to both expected, and unexpected, Life events and ensuring investments can deliver a predictable income aligned to an individual’s desired Lifestyle in retirement. There is also a focus on Lifetime planning to align part of a retirement pot to lifetime growth to allow for future flexibility. Finally, the framework incorporates a focus on Life legacy, highlighting how different products are more, or less, suitable for passing on a legacy.
To effectively engage people with retirement savings we have to acknowledge the personalisation element that needs to be built into retirement planning. All four aspects of the 4-Life framework, in our view, will help deliver more successful outcomes if they are all incorporated into how to build investment solutions that can help everyone achieve their own personal retirement goals.
