"To see levels of advice hitting new lows is disturbing and risks leaving thousands of elderly consumers facing poverty later on in their retirement."
More than 62,000 people accessed some of their pension for the first time during a six-month period last year, but 34% haven’t taken any form of financial advice, according to research from the Association of British Insurers.
Broken down, 21,000 people accessed an average pot size of £120,000 without ever having spoken to a financial adviser.
Whilst the drawdown pot size of £120,000 is the highest on record, the ABI also found that the proportion of customers reaching retirement with more than £250,000 also doubled in the space of just two years, to 11%.
The ABI’s director of long-term savings policy, Yvonne Braun, commented: “Pension freedoms gave consumers many more options and flexibility in their retirement, but with greater choice comes greater risks. To see levels of advice hitting new lows is disturbing and risks leaving thousands of elderly consumers facing poverty later on in their retirement. New problems require new solutions, and empowering consumers to make the right decisions for them is our priority at the ABI which is why we are publishing new proposals on how to communicate with customers today.”
Head of long-term savings policy, Rob Yuille, said: “The days when nearly everyone got a guaranteed income with their pension savings seem like a distant memory. There’s now a need for a more tailored approach to the communications we send to customers to ensure that they’re aware of and informed about the new risks and opportunities that our evolving retirement ecosystem presents.
“It’s great that people are reaching retirement with greater amounts stashed away in their nest eggs, but we have to make sure that they’re armed with the information they need to make smart decisions about how to use it in the run up to, and during their retirement.”
Emma Byron, managing director at Legal & General Retail Retirement Income, added: “When customers reach the point at which they start to access their pension it’s absolutely vital that they take financial advice before making what can be life-changing decisions – and that they continue to take advice at regular intervals throughout their retirement. Today’s customers are being asked to take more responsibility for managing their retirement funds than any previous generation. While that opens up lots of exciting possibilities it also puts the responsibility on the customer to get it right and to make the right decisions for the duration of their retirement.
“Legal & General’s own research revealed that nearly a third of over 55s are spending less than a week planning a retirement that could last more than 30 years. A good financial adviser will be able to help customers understand how their needs could change and give them the best chance of having enough income throughout their retirement.”