Savers entering drawdown chose to ignore investment pathways during their first year in existance, Interactive Investor has found.
According to the company's analysis of its clients, only 5 per cent of savers entering drawdown in the year since launch said they would consider one of the four options available through investment pathways - with only 1 per cent going on to purchase one of these options.
The Financial Conduct Authority introduced four pathways after it found many savers were focusing solely on taking tax-free cash from their pensions and were "insufficiently engaged" with how to invest their pension once they moved into drawdown.
The pathways include an option for consumers who have no plans to touch their money in the next five years (option one) and for those who plan to use their money to set up a guaranteed income within the next five years (option two).
The regulator also proposed an option for consumers who plan to start taking money as a long-term income within the next five years (option three) and those who plan to take out all their money within the next five years (option four).
Interactive Investor found that out of the savers who had chosen one of their pathways, option one had been the most popular choice, followed by option three.
Interactive Investor clients are yet to take up either option two or four.
The company said the low uptake, together with evidence of a preference for just two of the four pathways, suggested it was already time for a review.
Becky O’Connor, head of pensions and savings at Interactive Investor, said at the time of launch the company had concerns it would not be popular among its self-directed client base.
O’Connor said: "We continue to support the principle of the initiative but would urge the FCA, with one year of industry data under its belt, to consider reviewing the pathways options as they stand, as it appears that pathways two and four in particular are not even piquing the interest of a small minority of our customers, suggesting that very few people plan to take an annuity or take out their whole pension in the short term.
“It makes sense that pathways one and three would be the most relevant. The reason someone might plan to start taking an income within five years or after five years might depend on their age, work status, salary and pension pot size.
“Many of our customers who are 55 or older have relatively large pension pots and are likely to be drawing down an initial lump sum for a particular purpose with no wish or need to touch their Sipp again for some time and so in this context, pathway one might make sense. That said, some who perhaps wish to retire early, in their fifties, might choose pathway three to facilitate early retirement.”