‘Better guidance on pensions and affordable access to financial advice is needed’
14th June 2022 09:08
by Rebecca O'Connor from interactive investor
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interactive investor comments on the call for evidence from government on whether people get enough help with pensions.
According to a report in The Times, the DWP is to issue a call for evidence this morning, asking consumers whether the help they get from their pension company is enough to make informed decisions about their life savings.
Companies will also be questioned on the level of support they provide and what investment strategies they offer. They will also be asked for data on how people are spending their pensions.
Commenting on the launch of the inquiry, Becky O'Connor, Head of Pensions and Savings at interactive investor, the pension and investment platform, said: “Pension freedoms gave people many options for how to invest and take an income from their pensions and this is important, but the flip side of freedom is confusion and possibly mistakes that can cost people dearly in retirement. Planning pensions can be fiendishly complex. Trying to do it on your own without any knowledge can feel like wandering around in the dark without a torch.
“Pensions are not all created equal and many people have more than one, with different features, protections and restrictions associated with each. So it can be very hard to make confident decisions on your own. The rise in the cost of living and stock market volatility makes it even harder to navigate: there seem to be fewer 'right' options.
“'Should I consolidate? Should I take my full 25% tax-free lump sum? Should I keep working? How much income can I take annually without eroding the value of my pot? Should I remain invested in growth stocks?' These are just some of the questions swirling around in the minds of people planning retirement.
“Better guidance and affordable access to financial advice is needed now more than ever.
“We have 'Investment Pathways', an FCA initiative to overcome the tendency to put too much in cash rather than remaining invested; we now also have the 'Stronger Nudge' to pensions guidance from Pension Wise. It will be interesting to see what the government's latest call for evidence can recommend.”
Interactive investor's Great British Retirement Survey revealed that the complexity of drawdown is a key concern for those approaching and at retirement.
The platform's 'Show Me My Money' report published in April this year found a widespread lack of knowledge among the population about their own pension arrangements, with almost half (48%) saying they don't know how much is in their pension and more than three-quarters (77%) not knowing the fee they pay.
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