Over a quarter of a million pension savers a year are being left to “fend for themselves” when they retire, says the Trade Union Congress (TUC).
The analysis shows that in the first year of “pension freedom”, 300,000 savers in defined contribution schemes withdrew cash lump sums without receiving financial advice.
In addition, another 60,000 bought annuities without consulting a financial adviser. And another further 11,000 purchased ‘draw down’ contracts, which allow them to take money from their pensions, without consulting a financial adviser.
“Pension freedom” is the name given to the changes introduced in April 2015 whereby anyone over the age of 55 can withdraw as much money as they like from their pension pot, subject to income tax.
The changes also introduced that savers in defined contribution schemes no longer automatically buy annuities which guaranteed them a lifetime income.
This freedom, in theory, was an incentive for pension savers as they would be more willing to contribute to their pension if they did not fear it was immovable until retirement. However, the study shows this freedom has left retirees having to make a range of complicated decisions about their likely lifespan, their investment plans and choosing between many complex pension products.
TUC General Security Francis O’Grady said “Pension freedom may sound great on paper. But it is not liberating to leave hundreds of thousands of people to fend for themselves in what is a very complicated and expensive part of the pensions market”.
At Moorland Mayfair, we are an FCA regulated wealth management company where all of our advisers have achieved a Diploma in Regulated Financial Planning. If you would like expert advice on how to take advantage of your pension freedoms without being held captive by your funds in retirement, please visit our website www.moorlandmayfair.com or call us on 02921880140.
Head of Research & Analytics