New industry research has revealed a worrying new trend among retirees who believe they do not need to get pensions advice, despite new pension changes which came into force in April.
According to the research which was carried out by Money.co.uk, over half of nearly 700 respondents aged 55 and over said they did not need specialist advice when withdrawing money from their pensions.
Although twenty per cent of respondents were planning to make use of the newly-launched Pension Wise service which provides a free thirty-minute session, many cited this service as a reason for not arranging a consultation with an independent financial adviser.
The findings were released just weeks before news broke that Pension Wise staff are now being redeployed due to low take-up for their guidance service. According to Money Marketing, of the 200,000 people who have taken advantage of the new pension freedoms, just 20,000 have made use of Pension Wise’s free advice service.
Sarah Hamilton, Senior Pensions Consultant at Aon Employee Benefits said: “Independent research has shown that few understand the financial implications of the new flexibilities. Rushing into a decision without understanding all the facts could lead to a generation of pensioners who wish that they ‘had done things differently.’ Whilst Pension Wise is a great starting point for understanding the multiple options that people who are due to retire can explore, the choices are complicated and often the decision, once made, is irreversible. Having personalised advice, in advance of making the decision, could avoid long-term financial disaster.”
Of those who said they did not require additional financial advice in the Money.co.uk survey, 28 per cent felt it was a waste of money, 27 per cent said they could not afford it and 15 per cent said they wanted to access their money quickly rather than speaking to an advisor first.
Of those who were willing to pay for specialist financial advice, 60 per cent said they wouldn’t want to pay more than £200 for it.
Commenting on the research, Hannah Maundrell, editor-in-chief at Money.co.uk said: “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.
“Looking before you leap and all those other clichés really are the name of the game, especially when you’re gambling a financial future that you’ve worked so hard to save for.”
Hamilton added: “Paying upfront for personalised advice could avoid longer-term financial pain. It will be interesting to see the outcome of the Financial Advice Market Review, which, as part of its remit, will examine how the industry can encourage a healthy demand for financial advice. A specific focus of the review will look at addressing the barriers which put individuals off seeking financial advice.”