Consumer confusion abounds with less than five months to go until the new pensions freedoms, as research from Partnership has revealed 53 per cent of over-40s do not know if they are eligible for the ‘guidance guarantee’.
The annuity provider commissioned Opinion Matters to survey more than 2,000 over-40s during October and November, and found that 18 per cent thought they were not eligible and only 29 per cent knew they could use the service.
The study found the confusion was more down to a lack of knowledge than a rejection of the concept, with 41 per cent stating ‘they did not know where they would go for guidance or information’ with regards to pension planning.
Some 21 per cent said they would look to their pension provider, while 17 per cent would ask their family and friends for help.
Only 5 per cent would look towards the guidance guarantee directly, while 18 per cent stated they would speak to a financial adviser and a further 18 per cent would look to online resources such as moneysavingexpert.com for help.
The study is not the first to report on awareness and possible takeup of the guidance guarantee, with all reports showing wild disparties.
A previous survey, also commissioned by Partnership as well as Defaqo found only 5 per cent of consumers would use the guidance guarantee, again this was due to a lack of understanding,
In October, research from the Chartered Insurance Institute conducted among more than 1,000 UK adults within five years of retirement, revealed that 92 per cent might make use of the guidance guarantee.
However, this overwhelming majority clashed with the results of a pilot project carried out by Legal & General and The Pensions Advisory Service earlier this year, which showed just 2.5 per cent - just one in 40 prospective retirees - might make use of various guidance options.
Andrew Megson, managing director of retirement at Partnership, said that the findings showed that there is a huge need for education around the new pension regime.
“Some people will naturally speak to their financial adviser and get the benefit of specialist advice, but we are concerned about those who may have modest pension pots and little margin for error.
“It is vital that as the industry seeks to develop products, the government ensures people understand that they are eligible for free impartial guidance which will help them to make the most of their retirement finances.”
peter.walker@ft.com
