Greater than half of pension pots are being cashed out in full as fewer individuals search skilled steerage, new figures from the FCA have revealed.
The regulator’s new retirement revenue market information printed in the present day 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%) that was moved into some type of drawdown and simply 8% used to purchase an annuity.
Steve Webb, LCP accomplice and former Pensions Minister, stated the figures have been hardly shocking contemplating that a whole lot of hundreds of individuals attain retirement every year with very small pension pots.
He stated: “These pots would generate little or no common revenue if unfold out over the many years of retirement. As a substitute, nearly all of individuals nonetheless choose that the perfect factor to do is to money out their pension and luxuriate in some more money initially of their retirement.”
He stated 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 moderately than money them in.”
Andrew Tully, technical providers director at Nucleus Monetary, stated the excessive variety of individuals accessing their pension pots mirrored the cost-of-living disaster that has hit the UK in recent times.
He stated: “The consequences of the cost-of-living disaster will sadly be felt for years to return, so it’s no shock to see higher numbers of individuals making withdrawals from pensions than within the earlier tax yr.”
He warned that customers should get good recommendation on the level they first entry their pensions financial savings.
He stated: “As a part of the element printed 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, stated fewer individuals searching for recommendation was an issue.
He stated: “It’s actually disappointing to see inertia proceed to play a giant 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 precise form annuity for his or her particular person circumstances.
He stated that enhancing the supply of steerage and inspiring extra individuals to hunt the assistance of an annuity dealer or impartial monetary adviser, moderately than merely accepting the status-quo from their pension supplier, will present higher lifetime shopper outcomes.
