Pension planning has become more complicated thanks to pension freedoms and the issues around defined benefit transfer regulation, but adding vulnerability into the mix brings an extra layer of difficulty.
This is especially a concern for pensioners who risk having their retirement savings stolen by what the Work and Pensions Committee has called a "new breed of pension crooks".
In September, the Work & Pensions Committee launched an inquiry into whether and how far the pension freedom and choice reforms are achieving their objectives and whether policy changes are required.
Among considerations is that people are making their pension choices without the support available, increasing the risk they will not get the best value from their savings.
Of people aged 55 and over and planning to retire in the next two years, just 7 per cent used the free and impartial Pension Wise guidance service.
The Committee is inviting written evidence on any or all of the following by Monday 23 October, including recommendations for improvements.
With growing regulatory and government scrutiny over pensions and vulnerability, Stephen Lowe, group communications director for Just Group, says it is worth firms taking time to get it right.
He states: “Pensions are an area of concern to the Financial Conduct Authority (FCA), which has specifically talked of how new groups of vulnerable customers can emerge, such as those retirees at risk of financial scams, following the introduction of new pensions flexibilities.”
Politicians and industry are not scaremongering: the figures back up their concerns. In August, the City of London Police released figures saying £42m had been lost from pension pots to scams within just two years of the 2014 Budget.
It warned many vulnerable pensioners had been hit twice – after being identified by the fraudsters as potential targets, they had been able to scam them repeatedly.
This is not just affecting those in later life but also those in their late 50s and early 60s, many of whom are going through great social change, such as retiring from full-time employment or divorcing.
These events could cause short-term periods of vulnerability which, if exploited, could mean long-term financial detriment throughout their pensionhood.
Keith Richards, chief executive of the Personal Finance Society, says: “Social change has resulted in additional vulnerabilities linked to divorce. The over 60s are exhibiting the greatest increase in divorce rates in the UK – the so-called ‘silver splitters’.”
When starting the pension advice journey, it is imperative that advisers know all the facts before beginning the advice relationship.
Claire Trott, head of pensions strategy for Technical Connection, explains: “All advice is individual to the client and this is just the same with vulnerable clients.
“Additionally, their needs may be more complex, so a full understanding of all the client’s assets and liabilities will be needed, as well as any planned support the family or friends may be providing to ensure the best plan is in place.”