Some 262,261 decumulation products were sold in the UK in 2021, figures from the Financial Conduct Authority (FCA) show.
But alarmingly, 40% of these – around 104,774 – were purchased without financial advice, making this the “highest number of non-advised decumulation sales since pension freedoms”, retirement specialist Just Group said.
Non-advised purchases have been on a continuous upwards trajectory since 2015 (33%) to around four-in-10 last year.
But the FCA data only includes guaranteed income for life and drawdown plans, with no mention of the over 300,000 defined contribution pensions that are fully withdrawn every year, “typically by people not taking either advice or guidance”, Just Group added.
‘Troubling picture’
Stephen Lowe, group communications director at Just Group, said: “The long-term trend has been a decreasing use of advice by consumers when they are making complex choices around how to use savings to fund retirement. We know only a minority of these non-advised customers take up their entitlement to free, independent and impartial pensions guidance, so these figures paint a troubling picture of more people making long-term retirement decisions every year without any professional advice, help or guidance.
“We are now seven years on from the ‘freedom and choice’ reforms and take-up of professional advice and free guidance is going backwards – surely this can’t be what the government had in mind? We’re talking about large sums here – an average of around £67,000 for each pension used to buy a guaranteed income for life plan and more than £156,000 ($186,300, €184,000) for the average drawdown solution.
“It’s inevitable that without advice and guidance some people will make decisions they’ll come to regret and much more needs to be done to stop so many continuing to fall through the cracks in the advice and guidance framework that the government and regulator have put in place.
“Pension Wise is the lifebelt George Osborne promised every saver when pension freedoms were announced but only the rare few get it. Evidence given to the work and pensions committee by the Money and Pensions Service (Maps) found that an earlier nudge – before people have made up their minds to access pension cash – is more effective in getting people to Pension Wise.
“But it seems the longest-serving pension minister and the FCA are content to let people flounder their way into retirement and not even trial this.”
