Yet only 20% of those not willing to pay claim they will take advantage of the free 30 minute session offered through the Government’s Pension Wise initiative. Official figures show that to date just a quarter of the 85,000 people that have taken advantage of pension freedoms used this service.
With so many unwilling to pay for independent financial advice, money.co.uk's research also reveals that almost two out of three (59%) do not feel they need it. Over a quarter (28%) think it’s simply a waste of money and 27% say they cannot afford it. 15% claim they just want to access their money quickly and do not want the ‘hassle’ of taking advice. For one in ten women, using a financial adviser is a daunting prospect that they claim they would feel too intimidated to use one.
On average, those planning to make a withdrawal from their pension would be willing to pay just £253 for financial advice, yet the average cost of an initial financial review is almost double this at around £500.
Worryingly, only one in three (38%) of those making a withdrawal admit they fully understand the tax implications of doing so.
According to recent research the Treasury is set to get an unexpected tax windfall of £700 million. This is considerably more than the £320 million officials originally forecast that pension freedoms would contribute to tax revenues.
Hannah Maundrell, Editor in Chief money.co.uk, commented:
“Our concern is that people will rush into a decision without fully researching the long term impact or costings, simply because they need cash fast. After all, many people making a withdrawal from their pension are doing so to keep up with day to day living expenses."
