Retirement solutions provider Pension Wise has discovered that those nearing retirement are more likely to have a better understanding of their pensions if they are provided with free, independent guidance.
The results stem from its own research, which found that 97% of users felt well informed about their pensions after a guidance appointment.
That compares to around six in 10 for non-users, the firm said.
Guidance, however, wouldn’t just educate people on their pensions, but also on how to spot scams.
Stephen Lowe, group communications director at Just Group, said: “Pension Wise is also on the front line of the ongoing battle against pension scams with 95% of appointment customers confident in their ability to avoid scams compared to 79% of non-users.”
Entitlement to free services
As a result, Lowe said the Pension Wise figures should “give the Financial Conduct Authority (FCA) motivation to draft rules to ensure the majority of people end up receiving impartial guidance”, as he argues only a significant minority currently does.
“Proof that using the [guidance] service does help people towards better outcomes is shown by the fact that nearly six out of 10 (57%) planned to change the way they were going to use their pensions after completing their appointment, and this number is higher for those with more modest pensions.
“Yet the weakness is many people may be missing out on this fantastic service they are entitled to, particularly those who are less engaged in pensions or with more modest pension pots.
“Our own recent research found that four in five (81%) of those aged 45-54 with defined contribution (DC) pensions did not know they would be entitled to free guidance, that equates to about four million people.
“To avoid anyone missing out in the future, appointments should be automatically booked for pension savers. This would transform the numbers using the service to the levels required with our research indicating that only one in 25 in the 45-54 age group would opt out of an appointment if it had been booked for them.”
