More than three quarters of those approaching retirement have failed to seek professional pension-related financial advice, a new YouGov survey has revealed.
The survey, carried out on behalf of a wealth management company, Old Mutual Wealth, polled nearly 1,000 people between the ages of 45-65 about the advice and support savers were seeking or intending to seek.
However, despite the raft of pension changes that have been implemented in recent years such as auto-enrolment, the Retail Distribution Review and the latest ‘Freedom and Choice’ changes as announced in the latest budget, the majority of polled savers do not appear to have taken professional financial advice.
- 35 per cent have never sought any help of any kind about pension savings
- Just 23 per cent said they have previously sought pension advice
- 17 per cent said they have sought advice from their current pension provider or have carried out their own research
- 16 per cent have relied on help from friends and family.
Clare Abrahams, Head of Auto Enrolment at Aon Employee Benefits described the survey’s statistics as ‘concerning’ and warned that as pension-related decisions are largely irreversible, a bad decision could result in a large tax bill and an ‘unnecessarily depleted pension pot’.
Meanwhile, a further YouGov survey carried out on behalf of the Sunday Times, revealed that a significant proportion of savers were planning to take advantage of the new flexible rules which will allow over 55s full access to their pension pots from April. Of those who had specific plans how to spend their funds, 11 per cent of DC pension-holders were planning to buy an annuity, 10 per cent were intending to invest their pension funds in buy-to-let property, 8 per cent were looking into stocks and shares, and 6 per cent favoured bonds. Over half of the DC pension scheme members admitted being unsure what to do with their pension funds when they retire.
But Abrahams warned against using pension money to invest in buy-to-let property, not just because of the tax implications when taking cash from pensions, but due to the taxation involved in property investment.
“Individuals wishing to make returns by investing in any asset class should ensure they have all the facts first,” she said. “In many cases, a pension solution might be the most tax-efficient way to access certain investments, but withdrawing cash from your pension for investment purposes needs to be thoroughly researched beforehand to ensure it is not going to result in diminished returns.”
She added: “The recent changes have opened the door to some really clever pension products. Aon’s Bigblue Touch is the latest innovative solution on the market to help employees navigate their wealth and make the best decisions for their retirement. As well as allowing flexibility in the way that individuals can take their retirement income, the Money financial aggregation software empowers individuals to understand their overall wealth, their spending habits and make informed decisions about affordable and sustainable options. Among other exciting features, Bigblue Touch is designed to alert the individual to specific advice at the moment that it might be needed and to give individuals a far better chance of improving their own outcomes.”
Aon UK Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Registered number: 00210725. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN.