Three in five 45 to 54-year-olds unsure what to do financially after work, research has found.
Most people still have no idea how to make their pension pay for their retirement as late as their mid-50s, research shows.
Three in five 45 to 54-year-olds say they are confused by their choices at retirement, rising to 65% of women, analysis by adviser Just Group found.
Only three in 10 told the survey they know what they will do with their retirement savings, and women were more uncertain than men.
In the UK savers can begin accessing their pension from age 55. But the research findings suggest millions of people are heading towards that milestone underprepared to make critical choices about how to fund their later life.
The research underlines the need for most pension savers to get free, independent guidance before accessing their pension, said Just Group.
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This guidance is available by government-backed organisation Pension Wise, but awareness and take-up of the service is low.
Only 14% of savers get impartial guidance from Pension Wise before accessing their pensions, according to this year’s Financial Conduct Authority figures.
Stephen Lowe, group communications director at Just Group, says: “When most people find their pension options confusing it seems common sense for the Financial Conduct Authority and the Pensions Regulator to prioritise significantly increasing take up of a free service proven to help people understand them, and avoid scams and paying too much income tax.”
Data from Pension Wise and the Money and Pensions Service has found these guidance sessions leave most users better informed and more confident in their decision-making.
“However, the opt-in ‘nudge’ to encourage people to take up this guidance means these sessions will still only reach a minority of people approaching the age when they become eligible to access their pension benefits,” said Lowe.
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Women were half as likely as men to be aware of the free, independent and impartial guidance on offer from the government. Only 12% of women are aware of Pension Wise compared to 20% of men, Just found.
The research also found just 28% of 45 to 54 year-olds said they knew what they planned to do with their retirement savings. Women were even more uncertain with under a quarter (24%) having certainty over their intentions.
The Department for Work and Pensions has backed a ‘stronger nudge’ proposal to make guidance become “a normal part” of the process of accessing a pension.
It plans to require pension providers to signpost savers approaching retirement to Pension Wise. The aim is to get most people using the service, much like pension contributions have become the norm since auto-enrolment.
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