With pension freedom comes choice, but that choice comes with a lot of complicated risks, Colette Dunn at consultancy Milliman has said.
The senior consultant, life practice, said: “The pension freedoms give individuals choice, but with that choice comes responsibility and risk,” she said. “The risks are complex and will be daunting for many individuals approaching retirement.”
Her comments came after an industry forum, held by the global consultancy and actuarial form, found that 69 per cent of insurance professionals and analysts were worried that consumers might make poor decisions.
Many of these senior industry figures believed people could run out of money during their retirement, with 91 per cent thinking the pension freedoms had increased the risk of pensioners blowing all their income.
Matthew Bird, independent financial planner for Gwent-based Seer Green, said: “In my experience, few people want to take their cash and run; basically they just want to call us and find out what is going on with the pension freedoms.
“I had a couple of phone calls in regard to the lowering of the lifetime allowance, which is creating a sticky situation for many middle-aged people whose final salary schemes are approximately £1m.
“Generally, someone with this will have been earning £70,000 a year or so, and to drop down to £25,000 a year with it in an annuity is a big drop in their circumstance. No surprise that they are looking for income drawdown products.”