Experts are becoming concerned at the number of people accessing their pensions without taking any advice.
Analysis of the sector by the Association of British Insurers (ABI) has revealed that only a third of people who withdrew money from their pensions in 2018 took any kind of financial advice.
ABI director Yvonne Braun warned that though the pension freedoms initiated in April 2014 had given consumers ‘many more options and flexibility in their retirement’ consumers had to beware that with wider choice ‘comes greater risks‘.
She said: “To see levels of advice hitting new lows is disturbing and risks leaving thousands of elderly consumers facing poverty later on in their retirement.”
Britain’s financial regulator – the Financial Conduct Authority (FCA) – produced even more dramatic figures for a 12 month period in 2017-18 when a massive 91% of UK adults did not receive any financial advice of any kind.
New figures have shown the average available draw down pot is £120,000 and the number of savers who have amassed more than £250,000 has doubled over the last two years to 11%
The ABI’s head of long term savings policy, Rob Yuille, commented: “The days when nearly everyone got a guaranteed income with their pension savings seem like a distant memory.
“There’s now a need for a more tailored approach to the communications we send to customers to ensure that they’re aware of and informed about the new risks and opportunities that our evolving retirement ecosystem presents.
“It’s great that people are reaching retirement with greater amounts stashed away in their nest eggs, but we have to make sure that they’re armed with the information they need to make smart decisions about how to use it in the run up to, and during their retirement.”
The ABI are so concerned over the low number of consumers taking advice that they are publishing new proposals for their members designed to improve communications with their clients.
Yvonne Braun said: “New problems require new solutions, and empowering consumers to make the right decisions for them is our priority at the ABI which is why we are publishing new proposals on how to communicate with customers today.”
The first proposal focuses on raising the awareness in consumers of the risks they face as they approach retirement and the need to make their pension pot last.
The second is a more wide ranging document looking at opportunities available to consumers at different stages in their lives.