Pension reforms will lead to individuals having to take greater responsibility for their private pensions or risk receiving a lower than expected income when they retire, J.P Morgan Asset Management has claimed.
Following a recent report by the Pensions Policy Institute (PPI) – that claimed that more pensioners are likely to rely on private pensions for their retirement income in the future, as a result of Government reforms to introduce auto-enrolment into workplace pensions.
Although J.P Morgan has welcomed the Government's proposals, it says the growing importance placed on private pensions highlights the "need for better engagement".
Commenting on the PPI report, Jasper Berens, head of UK retail at J.P Morgan believes auto-enrolment is a "positive step" for private pensions as more individuals will be enrolled, but he warned that for most people the minimum level of contribution "will not be sufficient to be relied upon solely for an income in retirement".
"The developments in the pensions landscape means individuals will need to take more responsibility for their own retirement income rather than assuming it will happen.
"However, I am not convinced people really understand what they need to do to ensure a suitable income when they retire and the proposed reforms crystallise this issue," he said.
Mr Berens continued by suggesting that financial education and understanding "needs to be re-defined and made simpler" to enable individuals to become more engaged and stop them from "burying their heads in the sand".
"This is a challenge for the industry but also poses a great opportunity for financial advisers to create innovative ways to engage more with a much greater number of individuals who are not used to seeking financial advice," he added.
© Fair Investment Company Ltd