The UK is in danger of developing two tiers to retirement planning leading to some “sleepwalking into a later life financial crisis”, the chief executive of an investments firm has warned.

Simon Rogerson, CEO of Octopus Investments has raised concerns after a study, conducted by Opinium, showed people’s approach to retirement planning dramatically changes once they earn more than £50,000.

He said a two track system of “clear winners and losers” could emerge.
The research suggested that there was a step change in people’s confidence, expectations and behaviours when it came to planning for their future for those earning between £50,001 and £60,000 compared to those earning under £50,000.

The key findings Mr Rogerson highlighted were:

♣ Just over 1 in 2 people of the 2,003 adults aged 18 or over surveyed (56%) in the higher income bracket (£50,001 to £60,000) had taken financial advice on their retirement plans versus 1 in 5 (18%) earning under £50,000.

♣ 14% of people earning £40,001 to £50,000 expected to hit the pensions lifetime allowance limit. This jumped to 63% when looking at those earning £50,001 to £60,000

♣ Those earning more than £50,000 were more likely to consider alternative investments to support their retirement plans, such as Venture Capital Trusts

Mr Rogerson 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.”

Mr Rogerson 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.”