Three insights into unsettling pension freedoms data
By Tom Carnegie, 22 Mar 18
The Financial Conduct Authority has released figures on pension freedoms that product providers have described as “concerning” and “do not make for comfortable reading”. International Adviser spoke to industry experts to get their thoughts on the data.
Ian Browne, pensions expert at Old Mutual Wealth, said the pension freedom figures on knowledge and engagement in the FCA data are “concerning”.
“Figures from the Financial Conduct Authority released this week show that around 300,000 pension pots are accessed for the first time every six months.
“Drawdown has far and away been the winner with 345,265 drawdown products being purchased since freedoms began, compared to annuities, which grew by less than half that at 152,843.
“But worryingly 32% of people entering into drawdown did not use a regulated adviser. This is particularly concerning as there a myriad of risks people need to manage if they opt for drawdown,” Browne said.
Uncertainty
In addition to these figures, Browne said consumers are still uncertain about their retirement options.
He said the FCA data shows a stark difference between what providers are facilitating and what consumers believe they have done.
“The market data shows 30% of pots accessed since October 2015 have gone into drawdown and 12% taken as an annuity. However, the Financial Lives Survey finds that 20% of adults say they took out a drawdown product and 29% an annuity,” he said.
Support drops-off
Further, Browne said the data, shows “astonishing” about a lack of knowledge and engagement in DC pensions.
“73% of those who were not advised weere unaware of the charges they incurred on their DC pension and half not choosing where their contributions were invested.
“The voices that championed freedoms in parliament are no longer there, with the scrutiny falling largely upon regulators and the industry.
“The consequence is that the FCA and TPR must work more closely together and collaborate as the lines blur between occupational pension and personal pension schemes,” Browne said.
Tags: Aegon | AJ Bell | FCA | Old Mutual | Pension Freedoms
