"Retirement planning can be confusing at all stages of life and after working hard to secure a pension pot, people need coherent and honest advice which is in their best interests"
As the nation welcomes Pension Awareness Day (15 September 2016) specialist pension advisory firm, My Pension Expert, is extending the appeal to those entering retirement with a warning to ‘shop around’ and seek professional advice to get a product more suitable for their needs and for the best returns, or potentially risk losing 20% of their lifetime income.
The financial leader’s warning comes after nearly half of its customers* (45%) changed the product they would have had from a lifetime annuity to something more suited to their personal circumstances. Typically, customers fed back that prior to advice from My Pension Expert they were unaware of the alternatives and had no intention to change.
For those customers who remained with a lifetime annuity and switched provider, My Pension Expert also found significant improvements in lifetime income. For example, a sample of customers from one of the UK’s largest pension providers, Prudential, saw an average increase of 22%.
While Pension Awareness Day is geared towards alerting the nation that it is not saving enough for retirement, director at My Pension Expert, Scott Mullen says more needs to be done to help people in later life hoping to make the most of their pension funds.
Scott said: “Retirement planning can be confusing at all stages of life and after working hard to secure a pension pot, people need coherent and honest advice which is in their best interests. Worryingly, our findings reveal many people don’t know where to turn for this support and by naturally relying on some of the more established companies in the sector, like the Prudential, they might actually be worse off.”
My Pension Expert’s discoveries follow criticism of the industry by The Pensions Advisory Service’s (TPAS) chief executive, Michelle Cracknell earlier this year. She called on providers to stop trying to keep clients in ‘their own walled garden’ while attempting to ‘entrap’ customers.
Scott added: “Many of our customers comment that they have put off investigating their pension options because they don’t understand the technical jargon, which is understandable. Unless they have worked in the financial services industry themselves, it is also unlikely that they will be aware of the options that are now open to them.
In the wake of Pension Freedoms, people have been given greater flexibility around the different products they can utilise at retirement – with options including fixed term annuities, pension drawdowns and invested annuities, however we’re having the same conversation with customers time-and-time again. They have their pension, they’re about to retire but they have no idea what sort of product they should choose.”
My Pension Expert stresses that when it comes to pension products, there is no ‘one size fits all’ approach. The firm of qualified Independent Financial Advisors recommends that retirees seek advice which considers all of their personal circumstances – health, wealth and lifestyle, as well as plans for the future to determine the product and provider they go with to ensure the maximum retirement income.
Scott concluded: “Most people are bamboozled by which product is best suited to their unique circumstances. While moves are being made by the government to provide guidance to more people, this won’t provide a personal recommendation or do the shopping around for them.
With an ageing population, it is in everyone’s best interests to demystify pensions and ensure those who have spent their lives investing in one, get the best income they can. We are trying to simplify the process for everyone while getting the best deals. We do this by combining sophisticated quote bidding technology with personal one-to-one advice to overcome the confusion. Unlike many other intermediaries, we offer advice to the masses, rather than being restricted by minimum fund sizes.”
