Lack of appropriate products creates risk for pensioners

"The onus is on the government to make it easier for people with modest amounts of pension wealth to take smart decisions that really will benefit them into the longer term, not just today, through increased use of default options."

As part of its latest work on retirement the FCA proposed pension providers offer their non-advised customers a choice of investment pathways to meet their retirement objectives.

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A consultation on the topic has recently closed and is now awaiting a response from the regulator.

Industry responses have been mixed, though many have warned against introducing default pathways.

Meanwhile research from the Association of British Insurers (ABI), published last month (June 4), found that about a third (34 per cent) of the 62,000 savers who accessed their pensions via drawdown for the first time last year didn’t take financial advice.

The industry body warned that by not accessing financial advice, thousands of retirees each month ran the risk of making "dangerous decisions" about what to do with the cash, which could eventually lead to them running out of money too early.

According to Yvonne Braun, ABI’s director of long-terms savings policy, pension freedoms gave consumers more options and flexibility in their retirement, but she cautioned "with greater choice comes greater risks".

She said: "To see levels of advice hitting new lows is disturbing, and risks leaving thousands of elderly consumers facing poverty later on in their retirement."

The government is offering people free at-retirement guidance sessions but the uptake is not as high as hoped.


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