The Press and Journal (Inverness, Highlands, and Islands)
Scots too cautious with their pension investing
Risk- averse Scots are ruining their chances of a comfortable retirement, according to financial planning firm Wren Sterling.
A UK-wide survey carried out by the pensions specialist found Scots were the least likely to take a risk with their investments in return for higher potential returns.
Only 3% of those questioned north of the border were happy to take a risk with their money to lock in greater returns, compared to an average of 9% across the UK and a regional high of 14% in Yorkshire and the Humber.
Wren Sterling, which boasts more than £ 3.6 billion in assets under advice, said its findings revealed a nation of savers enrolled in compulsory workplace pensions who were doing nothing to m a ke their and their employers’ investments work for them – a situation “compounded by the volatility of investments during the coronavirus pandemic”.
Figures from the Pensions Regulator show 95% of employees are invested in their workplace pension’s default fund.
According to Wr e n Sterling, many of these workers are unlikely to have reviewed the suitability of the fund against their individual circumstances.
Just 36% of the Scottish employees surveyed by the firm had sought financial advice from a professional.
One- third ( 33%) said they didn’t need financial advice, with a further 31% citing the cost as prohibitive and 17% saying advice was only for the wealthy.
Wren Sterling head of marketing Nick Moules said: “The UK Government has done a great job in making employees save for their retirement through compulsory workplace pensions but it’ s not enough.
“To benefit from the tax incentives and to make their pensions work harder for them, people need help to understand the range of funds or investments they are currently invested in and to evaluate whether these are the most suitable options to maximise returns throughout their working life.
“The coronavirus pandemic makes financial advice even more important because people saving for retirement will have seen the value of their investments fluctuate over the last six months.”
Mr Moul es added: “Where the equity markets have had this kind of shock in the past it has been usually followed by a period of strong growth.
“In 2008 there was a bear market, which means a fall of more than 20%, that lasted for 1.3 years, which is just a blip for long-term pension savers,” added Mr Moules.
“In 2000, when the dotcom bubble burst, there was a bear market for 2.4 years but it returned strongly afterwards.
“Investors need financial advice that reassures them through these periods, and makes sure their money is in a place where it could benefit from the growth and seek to minimise losses.”
To understand how employees feel about investing their pension money, Wren Sterling asked them to pick between four investment scenarios for a £100,000 lump sum investment.
The answers revealed the highest number of Scots would choose the investment option which presents the least risk to their capital but also offers the lowest potential returns.
Mr Moules said: “Getting a retirement savings strategy right now and aligning it to individual circumstances means people have a better chance of being better off in retirement and achieving the retirement they dream of.”
Wren Sterling, with offices in Nottingham, London, Glasgow, Wey bridge, Warwick, Halifax and Grantham, was created in 2015 through a management buyout of Towergate Financial.