While people appear happy to access their savings now, they aren’t doing much to secure their futures in retirement, the latest figures have shown.
UK Financial Conduct Authority data shows little change to the balance between using pension freedom’s flexibility and a commitment to long-term saving.
Since the freedoms were introduced in April 2015, 1.8 million savings pots have been accessed for the first time.
Again, the FCA warned: “Consumers should carefully consider the benefits and risks of their options for accessing pensions savings, including giving up the rights to guarantees.”
The data reveals that almost six in 10 pensions with guaranteed incomes are not taken up and increasingly people are surrendering their guaranteed benefits.
“The FCA’s latest figures highlight, yet again, that while consumers are happily utilising the power the freedom awarded, there remain many that don’t see the risk or downfall of this power,” commented Ian Browne, pensions expert at Quilter.
“Navigating the waters of retirement income is choppy, as numerous tides can impact your decision. Guidance and advice are crucial so people’s actions reflect their wants, needs and concerns.”
Browne advocated for a one-page mid-life pension MOT instead of the ‘wake-up’ measure at 50, proposed by the FCA, which he argued would be too late for most.
Other bitesize chunks from the FCA data include:
The FCA bulletin provides a summary of the latest data for the second half of financial year 2017/18 – 1 October 2017 to 31 March 2018.
- Though the total number of pots accessed remains consistent, there has been a 9% fall in full cash withdrawals from, usually, smaller pots.
- The average contract-based pension pot size entering drawdown for the first time increased by 18% to £123,000 from £105,000 ($135,900, €116,700).
- The average size of pension pot from which a partial lump sum withdrawal was made also increased but by almost 50% to £92,000 from £62,000.
- The proportion of full cash withdrawals and annuity plans sold with advice fell to its lowest rate since the second half of 2015/16.
- Just less than a third of drawdown sales are still non-advised, with many defaulting in to cash, which the FCA described as “unsuitable”.
