Making investment decisions into old age

Seven in ten retirees have not set up a Lasting Power of Attorney

More than 615,000 pensioners are on course to make investment decisions into old age but new research[1] suggests tens of thousands have not set up a Lasting Power of Attorney (LPA), with seven in ten (70%) people in retirement not having set up an LPA.

The findings, which coincided with Dementia Action Week, revealed a financial planning blind spot which could leave tens of thousands of pensioners financially vulnerable in retirement. An LPA is a very important part of advance planning for a time when a person may not be able to make certain decisions for themselves.

At the heart of any decision Dementia is a devastating condition which strips a person of their memories, relationships and identities. That’s why it’s so important that time is taken for advance planning, always ensuring that individuals living with dementia are at the heart of any decision to get an LPA or deputy, so they have the right to make important decisions about their life that might come later.

Four years ago, an overhaul of the pension rules gave people the freedom to keep their pensions invested in retirement and draw an income as and when they like. Based on the latest FCA[2] data, it is estimated as many as 615,000 people have since switched their savings into drawdown.

Making complex decisions DIY investors managing drawdown without professional financial advice need to make decisions on where to invest and how much to withdraw at a time when their physical or mental health might be deteriorating. But without an LPA in place, their families or friends would be unable to quickly step in to help them without facing a lengthy court process.

Registering an LPA has become even more crucial since the pension reforms. Hundreds of thousands of people are now making complex decisions about their pension into old age, when the risk of developing illnesses such as dementia increases.

All stages of your retirement Despite this, a vast number of retirees are unprepared for a time when managing their pension might become hard, or even impossible. This problem is creating a potential time bomb as the population in drawdown expands and ages. Obtaining professional financial advice will help you to make the most of your savings and ensure you have the right plans in place for all stages of your retirement.

Four in five (80%) of all Britons have not registered an LPA, with women (82%) marginally less likely to have a set one up than men (78%). Among over-55s, seven in ten (73%) don’t have an LPA, rising to more than four in five (82%) 45-54 year olds.

Worse case scenarios According to the Alzheimer’s Society, there are currently 850,000 people in the UK living with dementia. This could increase to over one million by 2025, and by 2051 to two million.

Not having an LPA – in worse-case scenarios – can lead to situations where assets and equity may be lost and those in a vulnerable position are forced to make decisions they are not capable of making.

Source data: [1] All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2012 adults. Fieldwork was undertaken between 8-9 May 2019. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). [2] FCA Retirement Income Data Bulletin September 2018 shows 435,769 people took out drawdown between April 2016 and March 2018. If numbers grew at the same pace as October 2017 to March 2018 (90,504), Zurich estimates the population in drawdown would have increased by 181,008 between April 2018 and March 2019, resulting in 616,700 people in drawdown.