The number of people taking regulated advice when entering drawdown has continued to fall, with just 58 per cent of savers taking advice in the half year to March, according to official figures.
Latest data on the retirement income market from the Financial Conduct Authority, published today (December 9), showed advised drawdown sales have steadily fallen over the course of 2020/21, with people increasingly taking the non-advised route.
According to the statistics, 58 per cent of people chose to take advice when moving to drawdown in Q1 2021, compared with 61 per cent in Q3 2020 and 63 per cent back in Q1 2020.
In contrast, the number of people turning to the non-advised route has risen steadily, to 32 per cent in Q1 2021, up from 29 per cent and 27 per cent in Q3 2020 and Q1 2020 respectively.
The number of people turning to PensionWise for guidance remained flat during this time, falling 1 percentage point to 9 per cent in the half year to March 2021.
Worryingly the data showed the most popular withdrawal rate was 8 per cent or more, with the exception of pots worth above £250,000, were the most popular rate was between 2 and 3.99 per cent.
Overall more people are turning to drawdown now than they did a few years ago. In Q1 2016 it was a total of 80,182 sales, now it is 91,200 sales, but the proportion of overall sales has shrunk from 65 per cent in January to March 2016 to its current level of 58 per cent.
Pot size plays an important role in whether people seek advice, for example those with small pots are more likely to turn away from advice than those with larger pots.
But the FCA's data shows both larger and smaller pot drawdown is on the rise.
The data found for pots worth £250,000 and above, in Q1 2021, 78 per cent were advised and 17 per cent were non-advised.
For pots worth less than £10,000, fewer than half were advised (39 per cent) and 50 per cent were non-advised.
Of pots between these two values, worth £50,000 to £99,000, 60 per cent were advised, compared to 31 per cent being non-advised..
Andrew Tully, technical director at Canada Life, said people were more cautious on the back of the Covid pandemic as fewer opted to access their pensions.
The FCA found the total number of pension plans accessed for the first time in 2020/21 decreased by 12 per cent to 596,080 compared to 2019/20 (673,831).
The number of pots that were fully withdrawn at first time of access in 2020/21 had also fallen by 9 per cent to 341,404.
But according to the regulator, nine out of 10 of these were for pot sizes worth less than £30,000.
Helen Morrissey, senior pensions analyst at Hargreaves Lansdown, said: “People aren’t raiding the pension piggy bank to pay for Covid, and the financial pressures brought about by the pandemic haven’t led to major changes in how people are accessing their retirement income.
"The number of people taking regular income drawdown withdrawals of 8 per cent or more is a worrying trend. This is a longer-term issue than just COovid, and while largely confined to smaller pension pots, there were still around 37,000 pots worth £100,000 or more being withdrawn at this rate in 2020/21."