Over 60% of prospective retirees support the introduction of the FCA’s Investment Pathways, a new study by Legal & General Investment Management (LGIM) has found.

The Investment Pathways initiative is intended to clarify the choices savers have and encourage them to take an active route through their retirement years.

The study, conducted along with NMG Consulting (NMG) and based upon findings among 1,200 non-advised existing and prospective drawdown users, found that Investment Pathways is supported by almost 70% of retirees-to-be under the age of 55, as well as 60% of prospective drawdown users over 65.

The strongest interest in Investment Pathways comes from pre-drawdown savers with pot values between £30,000 and £100,000, which represents the majority of the non-advised drawdown market.

LGIM suggested that savers praise the clarity and simplicity of Investment Pathways, with nine in 10 consumers being able to align at least one of the options to their needs, while 60% felt confident enough to make an independent decision following the guidance they received. Only 12% of prospective users felt the need for more formal financial advice.

LGIM head of defined contribution, Emma Douglas, commented: “The positive reception to Investment Pathways is a promising first step in overcoming inertia at retirement and achieving greater engagement with non-advised members. The Investment Pathways go a long way in alleviating anxieties, in particular for non-advised savers who are yet to draw down.

“Done well, Investment Pathways should complement other industry initiatives such as the Pensions Dashboard and also pension consolidation, to give members a single view of their retirement investments and clear information about their options. In this way, we can turn the confidence boost that Investment Pathways deliver into meaningful action which delivers better retirement outcomes for savers.”

Meanwhile, the study found that more than half of existing drawdown users think Investment Pathways are too basic, due to their lack of fund choice, while a third of respondents want to choose from a small shortlist of funds, and a fifth would prefer a wider fund choice.

When it comes to available options, income drawdown is the most popular pathway for both prospective (46%) and retired drawdown customers (43%).

NMG Consulting partner, Jane Craig, added: “It’s great to see a much needed default solution for retirement income come to market. But it’s clear that the less engaged proportion of pension savers are going to need a really strong nudge to take notice and act – the greatest barrier to take-up is likely to be inertia.”

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