Greater than half of pension pots are being cashed out in full as fewer folks search skilled steerage, new figures from the FCA have revealed.
The regulator’s new retirement revenue market information revealed as we speak confirmed that round 56% of all pension pots accessed have been cashed out in full.
That was in comparison with simply over a 3rd (36%) moved into some type of drawdown and simply 8% used to purchase an annuity.
Steve Webb, LCP accomplice and former Pensions Minister, mentioned the figures have been hardly shocking contemplating that tons of of hundreds of individuals attain retirement every year with very small pension pots.
He mentioned: “These pots would generate little or no common revenue if unfold out over the a long time of retirement. As an alternative, nearly all of folks nonetheless choose that the perfect factor to do is to money out their pension and revel in some extra money initially of their retirement.”
He mentioned that with fewer retirees having DB pensions to fall again on, it’s time to, “increase pension pots to a dimension the place it is sensible to maintain them quite than money them in.”
Andrew Tully, technical companies director at Nucleus Monetary, mentioned the excessive variety of folks accessing their pension pots mirrored the cost-of-living disaster that has hit the UK lately.
He mentioned: “The results of the cost-of-living disaster will sadly be felt for years to come back, so it’s no shock to see larger numbers of individuals making withdrawals from pensions than within the earlier tax yr.”
He warned that buyers should get good recommendation on the level they first entry their pensions financial savings.
He mentioned: “As a part of the element revealed alongside the headline numbers, the info confirmed that lower than half of individuals (47%) search recommendation or steerage (Pensions Smart) earlier than shopping for an annuity, and that’s trending down, in contrast with the identical interval two years beforehand, the place 58% of individuals sought recommendation or steerage.”
Nick Flynn, retirement revenue director, Canada Life, mentioned fewer folks in search of recommendation was an issue.
He mentioned: “It’s actually disappointing to see inertia proceed to play an enormous position in retirement revenue choices, with far too many individuals not exercising their proper to buy round for not solely the perfect charge, but additionally the appropriate form annuity for his or her particular person circumstances.
He mentioned that enhancing the supply of steerage and inspiring extra folks to hunt the assistance of an annuity dealer or unbiased monetary adviser, quite than merely accepting the status-quo from their pension supplier, will present higher lifetime client outcomes.