A new report from the National Association of Pension Funds has found uncertainty prevails around what to do with pension savings after pension reforms begin in April.

The research, 'Understanding Retirement', was commissioned to understand the practical experience of people aged 50-70, still working and already in retirement.

It identified three groups within this demographic, each with a typical income and attitude towards retirement.

Graham Vidler, director of external affairs at the NAPF, said: "These pension reforms will directly affect up to 5 million people in the next five years but there's still a great deal of uncertainty about what people should do to make the best use of them."

"The overwhelming majority of people affected by the reforms tell us they want a secure income for their retirement but there's currently no clear route for them to achieve this," he added.

The three groups identified by the report include; 'Satisfied Sarah & Simon' – homeowners with an average salary of GBP 37,520 and a significant defined benefit pension through their employers; 'Maggie & Malcolm in the middle' – homeowners with some mortgage remaining, an average salary of GBP 30,000 and savings in a defined benefit pension; and 'Pinched Penny & Paul' who live in rented accommodation and have no pension beyond the state pension.

Vidler says the 'Maggie and Malcom' group now represent the largest group of non-retired 50-70 year olds at 4.8million and they are the group that under the new reforms whose decisions carry the greatest risk/benefit.

He said to relieve pressure and make the best choices, three things were required.

"They need clearly defined pathways into retirement, guidance should be heavily promoted, and a range of products to choose from that suit their needs," he said.

Research from BlackRock revealed similar levels of uncertainty around pension reforms.

Its 'Investor Pulse Survey' of 2,000 people aged between 25-74 found that more than a quarter of 'baby boomers' are undecided about what to do in April.

Alex Hoctor-Duncan, head of EMEA Retail at BlackRock, comments: "Come April, Britons will have choice and control over the financial future at retirement, which they did not have before, and with this choice comes greater financial responsibility.

"People must think carefully about their retirement needs and how they will fund it over the long term"

First published 29.01.2015

Lindsay.sharman@wilmington.co.uk