Third of first pension withdrawals taken without advice

One third (34 per cent) of people who accessed their pension savings via drawdown for the first time during a six-month period in 2018 did so without taking any advice.

Analysis from the Association of British Insurers (ABI) found that more than 62,000 people had withdrawn from their pension during this period, but only 21,000 had taken any form of financial advice.

The ABI director of long-term savings policy, Yvonne Braun, warned that, although pension freedoms have given consumers “many more options and flexibility in their retirement”, with wider choice “comes greater risks”.

She continued: “To see levels of advice hitting new lows is disturbing and risks leaving thousands of elderly consumers facing poverty later on in their retirement.”

The Financial Conduct Authority found a similar trend across a 12-month period during 2017/18, that 91 per cent of UK adults did not receive financial advice of any kind.

The average drawdown pot size of £120,000 is the highest on record, while the ABI also revealed that the number of savers reaching retirement with over £250,000 doubles in two year, to 11 per cent.

Commenting on the findings and the publication of the ABI’s advice documents, the ABI head of long-term savings policy, Rob Yuille, said: “The days when nearly everyone got a guaranteed income with their pension savings seem like a distant memory.

“There’s now a need for a more tailored approach to the communications we send to customers to ensure that they’re aware of and informed about the new risks and opportunities that our evolving retirement ecosystem presents.

“It’s great that people are reaching retirement with greater amounts stashed away in their nest eggs, but we have to make sure that they’re armed with the information they need to make smart decisions about how to use it in the run up to, and during their retirement.”

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