Many savers approaching pension access age are still confused about what options are available to them, with Just warning that regulators need to push for stronger support.
According to research, published this morning (December 9), out of 1,000 adults aged 45-54, 59 per cent were confused about what to do at retirement.
This rose to 65 per cent for women, who were half as likely as men to know of the government’s free guidance service Pension Wise (12 per cent versus 20 per cent).
The research also found fewer than a third (28 per cent) of savers in this age bracket knew what they wanted to do with their retirement savings.
This was especially true among women, with a mere 24 per cent being certain of their intentions.
Stephen Lowe, group communications director at Just Group said there was “overwhelming evidence” that stronger support was needed for the majority of those facing important pension decisions.
Mr Lowe said: “When the evidence shows that most people find their pension options confusing and are unsure what they will do with their savings, it seems common sense that the FCA (Financial Conduct Authority) and the Pensions Regulator should prioritise significantly increasing take up of a free service that is proven to help people understand their pension choices as well as avoiding scams and paying too much income tax.
“The Pension Wise evaluation from the Money and Pensions Service tells us that these guidance sessions leave the vast majority of users better informed and more confident in their decision-making.
“However, the opt-in ‘nudge’ to encourage people to take up this guidance means these sessions will still only reach a minority of people approaching the age when they become eligible to access their pension benefits.”
In the recent debate on the Pension Schemes Bill, MPs from across the House put forward an amendment that would have required the government to write to members five years before they could access their pot, offering them a Pension Wise appointment.
However, this proposal was voted down by a majority of 89 votes.
According to figures from the FCA, only 14 per cent of savers receive impartial guidance before accessing their pensions.
To improve this, the department for Work and Pensions (DWP) recently (October 28) said it would look to publish regulation which will require providers of workplace pensions to signpost guidance whenever savers look to access or transfer their pots. But it stopped short of making guidance mandatory.
At the point at which a saver indicates they would need to take guidance, providers will be expected to incorporate booking an appointment with Pension Wise into the process.
Mr Lowe said: “The DWP’s recent ‘stronger nudge’ proposal made clear that they want guidance to become ‘a normal part’ of the process.
“The ‘norm’ is a significant majority of people – much like pension contributions have become ‘the norm’ since auto-enrolment – and it is certainly not a meagre 14 per cent.