IMMEDIATE RELEASE
Hard-to-access pensions support leaving millions of people with mental health problems at risk of worse retirement outcomes.
6 June 2023
- Millions of people with mental health problems are facing a financial cliff edge when they retire, in part because they are not getting the information and support they need to plan for retirement and build savings.
- This is the warning of new research by the Money and Mental Health Policy Institute, which found that retirement planning services need to do more to meet the needs of people with mental health problems.
- Hard-to-access and confusing information and guidance services risk leaving people with mental health problems struggling to understand their options, while the way services are promoted leaves too many feeling it’s “not for them”.
- The research also raises concerns that some people are being left at risk of making crucial decisions about their pension while acutely unwell and more exposed to financial harm.
- Money and Mental Health is urging pension providers and services offering information and guidance to take action to improve support for people with mental health problems.
The new Money and Mental Health research highlights the range of challenges people with mental health problems can experience when planning for retirement – from building savings to accessing pensions information and guidance (1).
The findings show that poor mental health can lead to people saving less into their pension, due to factors like having to spend extended periods of time out of work, taking lower-paying jobs or retiring early.
These factors make it more vital that people with mental health problems can get appropriate support with retirement planning – including being able to access guidance and information around pensions, to minimise the risk of financial harm in later life.
However, the research warns that existing services are not meeting the needs of people with mental health problems – despite recent efforts across the pensions sector to improve the accessibility of information and services.
In particular, it highlights problems with the design and promotion of services that are creating practical barriers for people with mental health needs. For example, many people with mental health problems can struggle to navigate communication channels like using the phone or digital journeys. It also warns that many people with mental health problems – particularly those with low levels of savings – feel that existing guidance and information around pensions does not reflect their experiences and gives the impression that retirement planning services are ‘not for them’.
The research warns that these problems could be contributing to people with mental health problems being more likely to be ill-prepared for retirement compared to people without mental health problems. New Money and Mental Health analysis of the Financial Conduct Authority’s 2020 Financial Lives Survey (2) found that, among people in the key retirement planning years (age 45-64):
- 27% of people with mental health problems said that they did not know they had to choose how they will take money from their pension — compared to just 16% of those without mental health problems.
- 51% said that they do not understand the options for taking money from their pension, compared to almost 36% of those without mental health problems.
- Only 17% reported having a clear plan about how to use their pension — again, less than those without mental health problems (25%).
A second key issue highlighted in the report is that people are often making critical decisions on their pensions savings while acutely unwell, and without the right support from services. For example, through an in depth survey of 272 people with mental health problems (3), Money and Mental Health heard stories of individuals who had spent large amounts of their life savings in one go while unwell, as a result of struggling with impulse control as a symptom of their mental health problems.
Conor D’Arcy, Interim Chief Executive of the Money and Mental Health Policy Institute, said:
“Choosing what to do with our retirement savings can be one of the biggest financial decisions of our lives. That can be daunting for anyone, and that’s why the progress made in recent years to make information about pensions easier to understand is a great step forward. But for those of us with mental health problems, the options available to help people understand their options and choose the route that works for them isn’t enough. That’s leaving many people facing a financial cliff edge in retirement.
As the FCA’s Consumer Duty comes into force in July, we’re calling on firms to take action to ensure people with mental health problems have the support and information they need to build savings and to avoid financial hardship when they reach retirement age. That includes reviewing the design and promotion of information around pensions to ensure it’s inclusive for those of us with mental health problems, and that it can be accessed via multiple communication channels.
We also want to see pension providers improve their support for people who may be making crucial decisions while unwell, for example by providing extra support to help them make informed decisions and introducing checks and balances to minimise the risk of financial harm later down the line.”
ENDS
Contact:
For media enquiries, please contact Brian Semple, Director of External Affairs and Income at Money and Mental Health, on 07935 216 804 or [email protected].
Notes to Editors
- This report was sponsored by the Money and Pensions Service (MaPS). It represents the research and views solely of the authors and of the Money and Mental Health Policy Institute and does not represent the views or experiences of MaPS.
- Money and Mental Health analysis of FCA, Financial Lives Survey 2020.
- Two surveys with Money and Mental Health’s Research Community, a group of nearly 5,000 people with lived experience of mental health problems or of caring for someone with a mental health problem. We received responses from 472 people on their experiences of saving for retirement, and 272 people completed a survey about experiences of engaging with information and guidance services.
About the Money and Mental Health Policy Institute
The Money and Mental Health Policy Institute is an independent charity set up by Martin Lewis, and committed to breaking the link between financial difficulty and mental health problems. We conduct research, develop practical policy solutions and work in partnership with both those providing services and those using them to find what really works. www.moneyandmentalhealth.org