The number of people taking regulated advice when entering drawdown has fallen by almost 10 per cent in the half year to March, according to official figures.
Latest data on the retirement income market from the Financial Conduct Authority, published today (September 29), showed advised drawdown sales had fallen from 66,400 in April to September 2019 to 59,784 in the half year to March 2020.
It showed 63 per cent of pension pots had entered drawdown with regulated advice being taken by the holder, while 10 per cent of pots entered drawdown by people who received Pension Wise guidance.
This compared with 27 per cent of plans entering drawdown with no advice or guidance.
The number of advised drawdown purchases has fallen steadily over the years from 66 per cent in April to September 2018 to reach its current lowest level of 63 per cent.
The difference in pot size had a significant part to play in an individual deciding whether to seek advice before considering drawdown.
The data found that for pots worth £250,000 and above, 83 per cent of pots were advised and 14 per cent were non-advised.
Whereas for pots with less than £10,000, fewer than half were advised (43 per cent) and a similar share (41 per cent) were non-advised.
Of pots between these two values, worth £50,000 to £99,000, 65 per cent were advised, compared to 26 per cent being non-advised.
The FCA figures also showed the number of pots that were fully withdrawn at first time of access in 2019/20 had increased by 5 per cent to 375,500.
According to the regulator nine out of 10 of these were pot sizes less than £30,000.
The total number of plans fully withdrawn in 2019/20 remained steady at around 440,000 for the year with a value withdrawn of just under £5.7bn.
Annuity purchases meanwhile continued to decline with 31,138 plans used to buy an annuity from Oct 2019 to March 2020, down 23 per cent from 38,381 in the prior half of the year.
The number of defined benefit to defined contribution transfers received by pension providers covered by the data in 2019/20 were down by 28 per cent to 40,600.
Stephen Lowe, group communications director at Just Group, said the figures raised concerns about the long-term sustainability of pension payments.
He said: “Today’s figures show more pension funds are being accessed, a higher proportion are being fully encashed and those who are taking income are taking higher amounts.
"Of those pots going into the relative complexity of drawdown, 27 per cent were moved without advice or guidance which is higher than the 25 per cent previously.
“We are more than five years into the pension ‘freedom and choice’ experiment and while giving people aged 55+ easy access to cash is undoubtedly popular, that doesn’t mean they are going to have more financially secure retirements.”
amy.austin@ft.com
What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.
