More than one in ten people over 50 have been contacted by pension liberators, the vast majority through cold-calling, a new survey by Old Mutual Wealth has found.
The survey, which asked 1,500 people aged 50-75 a range of questions about retirement, found that 12 per cent of respondents had been contacted by firms offering a “free review”, “unlocking”, or “liberation” of their pension.
The number who were contacted by phone shot up from the 2015 figure, from 56 per cent to 68 per cent. The report found that the liberators were offering to divert savings “into other investments with the promise of amazing returns, which often fail to materialise”.
These figures formed part of a wide-ranging report on the current experiences of retirees and pre-retirees. It covered income and debt in retirement, attitudes towards inheritance, the shift from defined benefit to defined contribution pensions, the upcoming launch of a secondary annuity market, and the use of financial advice.
On the latter, the report found that those retirees that used a financial adviser received a retirement income that was on average 41 per cent higher than those who did not.
Advised pre-retirees were also likely to have saved significantly towards their retirement. On average they had saved £170,000, compared to the non-advised pre-retirees’ £100,000.
However, the report did not offer insight into whether people were better off because they were advised, or were advised because they were better off.
On retirement income, the report found a significant drop in average annual income since last year. The average retirement income in 2016 was £18,000, compared to £19,700.
The report said this suggested a “spend now save later” attitude was becoming more prevalent in the UK.
Actual average income in retirement was a £5,500 less than expected income.
The report also found that one in three retirees were in debt, with the average amount sitting at £34,200. The most common form of debt was mortgage debt.
On the secondary annuity market, the report found very little interest in cashing in an annuity, particularly among those who were advised. Just 8 per cent of people with a financial adviser intended to cash in their annuity, compared to 20 per cent of those without an adviser.
The report also found the switch from DB to DC pensions was “gathering pace”. Fifty per cent of retirees were using a DB pension, accounting for 61 per cent of their income. But of the pre-retirees surveyed, only 34 per cent had a DB scheme, and expected it to account for only 45 per cent of their retirement income.
All in all, OMW concluded that the “new normal” of retirement was shifting away from the old, fixed attitude to retirment.
“That normality doesn’t exist for most people in 2016. There is much less certainty on what retirement looks like and no two experiences will be the same.,” Steven Levin, OMW’s chief investment platforms, said.
He said the “new normal” would involve a wide range of incomes sources, more part-time work, and greater use of equity release in property.
james.fernyhough@ft.com
