It’s retirement literacy, not financial literacy that’s a global problem, says GBST
Research by GBST, a leading global provider of wealth management and advice solutions technology for the financial services industry, finds that when it comes to retirement literacy, too many people feel ill-equipped to manage their funds and generate an income that will deliver a comfortable lifestyle in later life.
The research, among over 120 financial advisers, highlighted that many retirees struggle with deciding what approach to take for pension income – for instance drawdown, guaranteed income or a blended approach – with 44% of respondents ranking it as either the first or second biggest pensions-related issue facing people at retirement. The findings are part of a new report, Managing the retirement income challenge: A global perspective, which examines the drivers of change in the global retirement landscape. With a particular focus on Australia and the UK, the report explores how current superannuation and pension systems address existing and future retirement needs and looks at what more can be done to improve retirement outcomes, including the role of government, providers, advisers, individuals and technology.
The report also draws on third party research and the views of several industry experts. A recurring theme is the lack of ‘retirement literacy’ in both the UK and Australia. While many consumers are adept at managing their day-to-day finances, they often feel unprepared when it comes to making appropriate choices with their long-term savings to generate an income that will last throughout retirement. With high-quality professional financial advice out of reach for many people, due to cost or lack of access, too often the onus is on individuals to take responsibility for complex decisions at retirement.
Robert DeDominicis, CEO of GBST, commented: “Delivering a sustainable income that lasts throughout later life is one of the most important functions of retirement savings. Yet 30 years after the introduction of the Superannuation Guarantee in Australia and 20 years since the launch of auto-enrolment in the UK, our report finds that a significant number of people are still struggling with saving enough during their working lives and managing their funds once they retire, leaving many relying heavily on state pension provision as they age. With rising life expectancies and an ageing population, the retirement income challenge is not going away.
“Successive governments in both Australia and the UK have attempted to address the issue with regulatory change, but actual progress has been slow. It’s clear that many factors are contributing to the retirement income challenge and the solution will also be multifaceted. Continued government action is certainly part of the solution and hopefully, we are now seeing real momentum to effect positive change. Greater engagement with pensions and improved ‘retirement literacy’ is also crucial to ensure people make better financial decisions and achieve better financial outcomes, supported by both comprehensive, professional financial advice and providers stepping in to guide people from accumulation into decumulation.
“We believe technology forms the final piece of the puzzle, with innovation in systems, tools and products that offer flexibility and choice for people to use their pension savings in a way that suits their needs - while also ensuring they enjoy a comfortable lifestyle in retirement. Solving the retirement income challenge will require a significant combined effort. But the prize will be improving financial resilience among older generations without increasing the burden on future generations.”
1 Research conducted by the lang cat on behalf of GBST among 121 financial advisers in June and July 2024.
About GBST
GBST delivers technology and digital solutions to enable, support and scale wealth management and advice organisations globally. Our team of experienced professionals create vital back, middle, and front-office solutions for wealth managers, life and pension companies, stockbrokers, fund managers, investment managers and advisers, as well as offer financial tools and digital services to banks and loan providers. Founded in 1983, GBST works with more than 100 financial brands across Europe, Australia, New Zealand, the US, Canada, and the UAE. Our leading-edge technology supports over 5.5 million investor accounts under administration with Direct to Consumer, Advised and Workplace channel solutions. For more information, please visit: www.gbst.com
About Composer
Composer is a wealth management administration SaaS technology solution. It helps advised and D2C investment platforms, superannuation funds, life and pension firms, and employee savings schemes improve efficiency and ensure regulatory compliance. Composer offers a comprehensive suite of solutions to streamline the administration of wealth management products from the distribution channel to the back office. It supports multiple investment products and asset types including the management of model portfolios. Composer enables business consolidation onto a single platform, driving operational efficiency, reducing risk and automating business processes and trading.
