Latest figures reveal unsustainable withdrawal rates and lack of guidance or advice prevail.
The latest retirement income market data published by the FCA reveals that 645,000 pension plans were accessed in 2018/19, of which 55% - 355,000 - were fully withdrawn. Just 11% of plans were used to buy an annuity.
Of those pots that were fully withdrawn, 90% were valued at less than £30,000. Meanwhile, among retirees taking a regular income from their pension, 40% were taking out cash at an unsustainable high withdrawal rates of 8%-plus.
Alarmingly, almost 50% of plans were accessed without any form of guidance or advice being taken by the plan holder. A further 37% took regulated advice, while 15% made use only of Pension Wise guidance.
The implications of the figures are complex, but there are concerns at the high proportion of plan holders who have accessed their pension without taking advice or guidance.
Mark Futcher, head of workplace wealth at Barnett Waddingham, warns that "people are putting their futures at risk" by "flying blind" in this way.
He adds: "There are so many factors to consider when choosing between annuities, drawdown, and taking a pension in cash, including how long someone will live, the investment environment, the geopolitical situation, their future health and long-term care needs. Making the wrong decision at retirement can easily waste 10 years' worth of contributions."
However, the preponderance of unadvised withdrawals may reflect the fact that the vast majority of pots were worth £30,000 or less, with 40% worth under £10,000; many people may have felt the amounts involved were too small to make it worth seeking advice.
The figures do flag up the risks involved in accessing pensions under the pension freedoms – not only the danger of running out of money altogether, but the potential for a much larger tax bill than necessary.
"It is important to think about the big picture and get advice on all the assets at your disposal in retirement, not only your pensions. And even if advice isn’t right for you, guidance comes at no cost to the public and everyone should seek guidance as a basic first step before taking cash from their retirement fund."
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