Octopus Investments Reading time: 3 mins

Is £50,001 the magic number for retirement planning?

25 Feb 2016
  • 14% of people earning £40,001 to £50,000 expect to hit the pensions lifetime allowance limit, jumping to 63% when looking at those earning £50,001 to £60,000
  • 22% of people earning £40,001 to £50,000 have spoken with a financial adviser regarding their retirement savings, this jumps to 56% when looking at those earning £50,001 to £60,000
  • Pension reforms have made 1 in 4 people (26%) nearing retirement less confident that their pension will give them a decent retirement income

Research published today by Octopus Investments revealed that people’s approach to retirement planning dramatically changes once they earn more than £50,000. The study, conducted by Opinium, highlights that the UK is in danger of creating a ‘two tier’ retirement system with clear winners and losers.

The research shows that there is a step change in people’s confidence, expectations and behaviours when it comes to planning for their future for those earning between £50,001 and £60,000 compared to those earning under £50,000.

Meanwhile, the raft of recent pension changes, far from giving people the sense of ‘freedom’ over their financial planning, has dented the confidence of a quarter of Britons nearing retirement.

Key findings

  • Just over 1 in 2 people (56%) in the higher income bracket (£50,001 to £60,000) have taken financial advice on the retirement plans versus 1 in 5 (18%) earning under £50,000.
  • 14% of people earning £40,001 to £50,000 expect to hit the pensions lifetime allowance limit, this jumps to 63% when looking at those earning £50,001 to £60,000
  • Those earning more than £50,000 are more likely to consider alternative investments to support their retirement plans, such as Venture Capital Trusts (VCTs)

Simon Rogerson, CEO of Octopus Investments, said: 

“Financial advice is important for everyone, so it’s concerning that there is such a shift in behaviour when people hit an income of over £50,000. While one might expect that high net worth Individuals would plan differently for retirement than those on an average income, this significant jump in confidence, advice and action between those earning up to £50,000 and those earning a few thousand more in the next income bracket is deeply concerning.”

Simon Rogerson, CEO of Octopus Investments, said:

“This research raises the danger of a ‘two tier’ approach to retirement planning where those that have a little more money will seek advice and invest for the future more effectively than others. Against this backdrop, people could be sleepwalking into a financial crisis in their later years. This would be a real shame as there is now the opportunity for everyone to take control of their financial future. The recent pension reforms make it important for everyone to access financial advice to make smart decisions and investments for their retirement.

“Investment into VCTs is a great example of this shift. We see the sharp uptick in interest in VCTs for those earning over £50,000 but just looking at our VCT offerings there is a minimum investment of £5,000, meaning they may be more accessible than people think. For those investors with the appropriate risk appetite, VCTs can be a useful diversifier, forming an important part of broader retirement planning strategies. These government-approved tax-efficient investments help smaller businesses to get the funding they need to grow, which in turn helps drive economic growth in the UK.”

“I would encourage everyone to speak to a qualified financial adviser to help them understand their options and develop a plan to put money aside, in the most tax-efficient way, so they can spend their retirement years in the best way possible. This is their future – the stakes are high.”


Notes to editors

The research was conducted for Octopus Investments by Opinium Research among a standard representative sample of 2,003 UK adults aged 18+. The fieldwork was undertaken between 22-25 January 2016. The research results are based on the results of an online survey. These results have been weighted to nationally representative criteria.

For journalists in their professional capacity only. The value of an investment, and any income from it, can fall or rise. Investors may not get back the full amount they invest. Tax treatment depends on individual circumstances and may change in the future. Tax reliefs depend on the VCT maintaining its VCT-qualifying status. VCT shares could fall or rise in value more than other shares listed on the main market of the London Stock Exchange. They may also be harder to sell. Personal opinions may change and should not be seen as advice or a recommendation. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. Issued: February 2016.