Pension Freedom  

Pension freedoms confuse half of savers

Pension freedoms confuse half of savers

Retirement savers are demanding an end to retirement planning rule changes as they grapple with the complexities of the new pension freedoms, a study from MetLife revealed.

The provider's poll of 960 people aged 55 plus and 109 specialist retirement advisers two years on from the launch of pension freedoms found more than three out of four (76 per cent) want a pause to further reforms to enable savers to plan for their retirement with increased certainty.

The study found just one in three savers (35 per cent) believe they have a good understanding of the new freedoms designed to deliver increased flexibility and more than half (54 per cent) find the rules confusing.

In addition, research among 84 MPs showed nearly two out of five (39 per cent) still believe the current pension system is not fit for purpose.

Around 36 per cent of over-55s fear losing their pension funds to fraudsters while 43 per cent are worried their pension funds will not last them through retirement.

Earlier this week the City of London Police revealed £8.6m in losses were reported by 24 victims of pension fraud in March, a sharp increase on the £779,000 reported by 12 individuals the month before.

In total, more than £42m has been lost to “pension liberation fraud” since April 2014, when the pension freedoms were unveiled by George Osborne, the former chancellor.

Victims of “liberation fraud” are often swindled into placing their pension funds in investments that do not exist, are illiquid or incapable of delivering the promised returns.

Around 57 per cent of those polled by MetLife said current low rates and stock market volatility mean their retirement savings are not sufficient to fund retirement.

Simon Massey, wealth management director at MetLife UK, said: “Pension freedom has been a qualified success delivering real change but it needs to be improved in order to deliver on supporting savers and advisers in providing a pension system fit for the 21st century.

“The pace of change over the past two years has been bewildering for savers and it is clear they want a pause for breath in order to better understand the opportunities from the new rules.

Mark Loydall, director of Cambourne Financial Planning, said all MetLife's research did was show something "that almost everyone involved in pensions on a day-to-day basis already knows."

However, he said he can't see the tide of changes to pension rules changing anytime soon.

Mr Loydall said: "I believe it is only a matter of time before pensions are hit again as a source of tax revenue. Unfortunately the rule changes have been disproportionately hard on money purchase plans and there is real need to make things fairer."

Patrick Connolly, communications manager at Chase de Vere, said he is not surprised that "many people don’t fully understand pension freedoms and feel less engaged with their pensions because of continual rule changes.  

"While increased flexibility and more choice is welcomed, this has also created more complexity and increased the risk that people will make the wrong decisions, which could affect their standard of living in retirement."