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While the average pension pot has reached a new record high, a third of retirees accessing their pension for the first time haven’t taken any form of financial advice, warns the Association of British Insurers (ABI).
Analysis by the ABI found that last year, the average pension pot size stood at a record-breaking value of £120,000, however of the 62,000 accessing their pension for the first time over a six-month period, via drawdown, 34% didn’t take any form of financial advice.
This is a worrying statistic as these decisions could lead to those in retirement not having enough money in the future to cover their living expenses.
Yvonne Braun, director of long-term savings policy at ABI, said: “Pension freedoms gave consumers many more options and flexibility in their retirement, but with greater choice comes greater risks. To see levels of advice hitting new lows is disturbing and risks leaving thousands of elderly consumers facing poverty later on in their retirement.”
One of the reasons the ABI believes that a large number of people are not getting financial advice is that advice is considered by many to be financially out of reach. However, by not making the investment in getting financial advice before accessing pension funds, savers could have insufficient money when it is needed later in life. For those who are unsure about where to get pension advice from the Government, organisation Pension Wise provides information on seeing a financial adviser on its website.
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