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(20/11/2006) Financial advice improves annual pension income by £3,000

Face-to-face advice leads to greater understanding and encourages long-term savings

People in ten households taking part in a unique financial social experiment will each receive £3,000 a year more in retirement after meeting regularly with a financial adviser.

Prior to taking part in the experiment, which is run by insurance giant AXA, participants could expect to draw only £11,800 per year for their pension - or just £226 per week. But after just three hour-long consultations with an Independent Financial Adviser (IFA), each household can now look forward to a pension of around £14,900 - or £286 per week.

The face-to-face time with an IFA has allowed participants to develop a greater understanding of the levels of income they can expect in retirement and has encouraged them to allocate savings to their long term financial future instead of focusing on short term financial needs.

Three participants have joined company pension schemes for the first time despite them being eligible to be members for several years. In all three instances one of their reasons for not joining was poor cash flow and also a lack of understanding of the company scheme benefits available to them. Two participants have increased their contributions to pension arrangements due to improved cash flow and an improved understanding of how the extra contributions should lead to extra pension income in retirement.

Saran Allott-Davey commented : "Generally our AXA Avenue participants were very focused on their short-term financial needs while vaguely worrying about the long term. They didn't have any clear idea of their expected pension benefits or what actions they could take to improve them. Pensions provision is a very complex area and my face to face time with the participants has been invaluable. It has resulted in clear benefits to five of our ten participants who now feel less worried about their long term financial future and more able to plan effectively."

"Advice focused on improving cash flow to ensure the funds were available for them to make the required contributions. We also took the time to explain the generous level of employer contributions and the long term benefits available to them if they were to join the scheme."

Three participants are still not able to make any significant improvement to their anticipated pension income, either because they are very close to state pension age or because their short term cash flow and short term debts are in a very poor state.

Saran Allott-Davey compiled a combined annual pension income forecast, for both groups involved in the year long experiment: the 'active group' who had been receiving advice, and the 'control group' who have been left to their own devices.

About AXA Avenue - the story so far

AXA Avenue was launched in November 2005 to explore the merits of financial advice and education by giving ten households in Brighton access to Saran Allott-Davey, Female IFA of the Year 2005, and benchmarking their financial wellbeing against ten households who do not have access to the IFA.

The overall aim of this experiment is to use financial education and planning to help to try to tackle the UK's chronic money problem by offering half the households (the active group) access to expert advice while the others (the control group) are left to their own devices.

The initial focus of the experiment was to help the participants take control of outstanding debts. Short-term savings were then made a priority for those in a position to be able to make regular savings. Saran was then able to turn her attention to income in retirement, exploring the pension provisions AXA Avenue participants already had in place and recommending how they could increase their funds.

About AXA

AXA UK is part of AXA Group. AXA Group is a worldwide leader in Financial Protection. AXA's operations are diverse geographically, with major operations in Western Europe , North America and the Asia/Pacific area. AXA had € 1,091 billion in assets under management as of June 30, 2006 , and reported total revenues of € 41 billion and underlying earnings of € 2,090 million for the first half of 2006.

AXA ordinary shares are listed on the Paris Stock Exchange; AXA American Depositary Shares (ADSs) are listed on the NYSE under the ticker symbol AXA.