Almost half of the people using pension freedoms don’t take advice

New data from the Financial Conduct Authority (FCA) has shown that 48 per cent of people withdrawing funds from their pension under the pension freedom rules didn’t take professional advice last year.
Since the pension freedoms were introduced in 2015 more and more savers have entered into drawdown arrangements, but the FCA is concerned that money now run the risk of running out of money to fund their retirement
The FCA’s data showed that of those who used drawdown arrangements 15 per cent used the Government’s free Pension Wise service, while 37 per cent sought out regulated advice on retirement planning.
Worryingly, only one in four people took sought advice when withdrawing all their pensions savings at one time, despite the potential tax implications of doing so.
According to the FCA, the propensity to seek advice increased as the size of the pension pot grew, with 70 per cent of consumers with pot sizes of £100,000 or more choosing to seek advice.
In comparison, only 20 per cent of those with less than £10,000 in pension savings sought out regulated advice.
The FCA is concerned that the number of people accessing advice is declining, with 34 per cent taking no advice whatsoever, up from 31 per cent the previous year.
Keith Richards, CEO of the Personal Finance Society, said: “It is deeply concerning how many people are pulling all their cash from their pension pots without advice or guidance, and the potentially catastrophic poor outcome for thousands of consumers must be acknowledged as a failing of government and regulator to deliver clear guidance for the public.
“The Personal Finance Society would like to see the government and the FCA do more to make sure providers are signposting guidance services and advice and explaining the potential ramifications if you don’t seek assistance.”

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