The regulator's latest data on the retirement income market showed that 70 per cent of people accessed their pensions for the first time without seeking advice, and that taking guidance was becoming less prevalent. But what does this mean for retirement saving?
Speaking on the latest FT Adviser podcast, Tom McPhail, director of public affairs at the Lang Cat, said one of his concerns looking at the data was the decline of people using Pension Wise.
Another concern was that for all pension pot sizes up to £250,000, the common rate of income withdrawal was more than 8 per cent each year, which was not sustainable.
He added: “What we are seeing is with the big pots you are more likely to take advice and take a sustainable level of income withdrawal. Whereas with smaller pots there are higher levels of income, or indeed full encashment, and they are less likely to take advice.
“There's not one market going on here, there's some people taking a retirement income, and there's some people accessing cash and I think they're two different things.”
Mark Ormston, director of propositions and corporate partnerships at Retirement Line, agreed the decline of the use of Pension Wise was “quite alarming”.
He questioned whether the stronger nudge regulations had played a role in this and that more people were seeking guidance from MoneyHelper rather than pensions-focused Pension Wise.
Pension Wise is a service from MoneyHelper, backed by the government, which offers free, impartial pension guidance to the over 50s.
“It could be that people have had a conversation with MoneyHelper through their scheme via the stronger nudges regulation and maybe even through the transfer flagging system, but they haven't had a conversation with Pension Wise. I wonder if that could be behind it?”
To listen to the podcast click the image above.
amy.austin@ft.com
