The Money and Pensions Service said it is “mindful” of the ongoing living cost crisis and the pressure it is placing on savers' pension pots.
At FTAdviser’s Later Life Summit, Maps’ chief executive, Caroline Siarkiewicz, said while she was not seeing people dipping into their pension pots yet to cover living costs, her team are wary this is a behaviour it could start to see.
Speaking to FTAdviser’s features editor, Melanie Tringham, today (May 19), Siarkiewicz said: “We haven’t seen people wanting to start dipping into their pension pots to cover costs of living yet, but obviously that's an area we’re very mindful of.
“What we’re going to be monitoring in the pensions space are two things primarily. One, are people starting to think about saving less as their finances are squeezed?
“And also, are they thinking that actually one way for them to get through this is to dip into their pension pot?”
Maps is, however, starting to see UK pension holders ask how they can maximise their income, and how they can access affordable credit.
“Where we are at the moment is the beginning. Typically, it takes a while before people start to engage with services.
“There will be a growing number of people who fall behind with their payments and fall into debt, so we’re making sure we’ve got sufficient capacity available across our funded organisations to deal with the potential increase in that.”
Inflation rose to a 40-year high in April, in what some experts have described as the worst inflation crisis seen in a lifetime.
Bank of England governor Andrew Bailey has also said “there isn’t a lot" the central bank can do about inflation forecasts of 10 per cent, blaming a series of unprecedented shocks to the UK and wider global markets.
Reviewing retirement pathway tool
By and large, customers come to Maps - a body sponsored by the Department for Work and Pensions - because they are told to, either by a provider or fellow organisation.
Siarkiewicz said engaging people with their pensions is “challenging”, echoing a sentiment felt widely across the industry hence the introduction of government-led initiatives such as the pensions dashboard.
“I used to work in the debt advice sector…I thought that space was bad until I discovered in the pensions space engagement is even lower,” she said.
Siarkiewicz reckons the impact of pensions dashboards will be “revolutionary” in solving part of this challenge, though she admitted people knowing where all thier pensions are and how much that will give in retirement is “only part of the story”.