May 01st, 2019
More than £3.2bn has been withdrawn from pensions – without advice!
Worrying new research conducted by Saga, where 2,000 adults were questioned, found that one in seven retirees have taken lump sums from their pension pots without obtaining advice from an Independent Financial Adviser.
The current overall total withdrawn, since pensions freedoms were introduced in April 2015, amounts to more than £23.6bn but £3.2bn of that has been accessed without any advice whatsoever.
The study also found that 84 percent of those questioned do not know what pension freedoms is and only 20 per cent would think about seeking advice when accessing their pension pots.
Managing Director of Saga Money, Jeff Bromage, stated “Obtaining advice from an IFA can cost a significant amount, which can put people off and therefore is an option only the more financially secure are prepared to pay for. However, this advice often ends up saving people more than it costs and will lead to a more secure financial future and ultimately a decrease in the number of vulnerable savers.”
Jeff Bromage also said that Saga Money are “incredibly disappointed” that during the Spring Statement on the 13th March, the Chancellor failed to address the need for more financial advice regarding pension freedoms.
“When pension freedom was first announced in 2015, the government initially promised that all over-55s with defined contribution pension pots would be eligible for free pension advice through its Pension Wise service. This promise was later diluted to the Pension Wise service providing ‘guidance’.”
Additionally, it is also worrying that most of the general public will be unaware that for certain types of pensions you will need an adviser with specialist qualifications and experience to ensure you are making informed decisions and not missing out. Furthermore that adviser should be ‘Independent’ so that the adviser is not tied to providing advice for specific products, services or product providers.
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Written by Kay Crooke – Associate Practice Director at Prosser Knowles Associates Limited.