Cara MacSherry, External Affairs Intern, Money and Mental Health
Pensions Awareness Week: achieving financial security in later life for people with mental health problems
12 September 2023
- It’s Pensions Awareness Week! We are all being encouraged to think about and plan for retirement.
- Living with mental health problems can influence the type of retirement we face. People with mental health problems often struggle to understand their pension options and can find existing services difficult to use.
- Accessible information and guidance services are required to improve retirement outcomes for people with mental health problems and support people to make informed decisions about retirement savings.
This week marks the tenth annual Pensions Awareness Week. This means we’re all being encouraged to look at our retirement plans and access free information and guidance to make the most of our pension savings.
But we don’t all face the same retirement. Some people have substantial pension savings to enjoy retirement. Others have multiple small pension pots and will need to make a little go a long way.
However much we have in pension savings, making the most of what we have is crucial. Yet, our research shows that people with mental health problems are at risk of worse outcomes in retirement, face challenges to building pension savings and experience greater difficulty accessing information and guidance.
Experiencing mental health problems’ can impact our retirement incomes
Living with mental health problems can influence the type of retirement a person may face.
2.3 million people in the UK with a mental health problem are approaching the end of their working lives. For this group, saving and planning for retirement can be particularly daunting. Poor mental health can lead to people spending extended periods of time out of work, taking lower-paid jobs and retiring earlier. Saving for retirement can be harder and financial security in later years more difficult to achieve.
“How are people like me, who’ve been in and out of work over the years supposed to save for retirement?” Expert by experience, aged 54.
People with mental health problems face challenges that go beyond insufficient incomes. The psychological and cognitive effects of mental health problems, such as memory problems and difficulties communicating, can be a barrier to engaging with retirement planning services. These challenges can be further entrenched by feelings of shame or fear of judgement.
“My mental health makes me feel like a rabbit caught in the headlights when it comes to retirement savings. I know that they are important and it’s essential to have a plan, but I feel completely paralysed whenever I start to contemplate retirement savings…” Expert by experience, aged 47
The options for what to do with our pensions savings are complex and diverse. The maze of guidance and information can be overwhelming for people experiencing the effects of mental health problems.
Over half (51%) of people with mental health problems say they do not understand the options for taking money from their pension. That’s compared to over one-third (36%) of those without mental health problems.
Accessibility of existing help
There are a number of pensions information and guidance services available, but these are severely underutilised. Access to good quality information and guidance such as retirement savings calculators, and services that support you to weigh up your options for drawing on pension savings are important for improving retirement outcomes for people with mental health problems. Yet, people with mental health problems often report that they face barriers in accessing existing help.For example, people with mental health problems are over-represented in lower-income jobs, which means people can think that information and guidance services are not for people like them, with smaller pension saving pots. People also tell us that they don’t know where to turn for help with retirement planning. And accessing these services is impossible if you’re unaware they exist to support you.
Enabling informed decisions
Information and guidance services are intended to support people to make informed decisions about their pension savings and retirement plans. However, our research has found that the services that currently exist are not delivering as well as they could for people who experience fluctuating mental capacity.
For people struggling with mental health problems extra support and guidance can be necessary to ensure people are in a position to make informed decisions to make the most of their savings. Unfortunately, this tailored support often is not provided.
“I understand the basics, I know what I pay and I know if I stick at this job and I don’t change circumstances for the next 30 years, what I’ll get a month as retirement pay. Unfortunately, as a woman with complex mental and physical health conditions, it’s unlikely I’ll carry on working full time and I want to retire as early as I can. There’s no way for me to figure out how those decisions will affect my retirement.” Expert by experience, aged 36
What can be done?
The hurdles that people with mental health problems face in accessing pensions information and guidance are not insurmountable. There are measures organisations can take to improve retirement prospects for people experiencing mental health problems. Some examples include:
- Reviewing the design and promotion of information around pensions to ensure it is inclusive for those of us with mental health problems, and that it can be accessed via multiple communication channels.
- Provision of specialist arms of pension guidance services for people with severe mental illness and equip specialist staff with enhanced training on mental capacity.
- Development of clearer communications about saving limits for people receiving benefits to provide reassurance for those wishing to save.
Action on these recommendations alongside others detailed in our report The pensions maze would represent a major step along the path of achieving better retirement outcomes for people with mental health problems. Pension Awareness Week is an opportunity to raise awareness, advocate for better support systems and ensure that everyone can enjoy a secure and fulfilling retirement.