The number of people seeking professional advice before entering the at-retirement market is in decline post freedom and choice, according to figures from the Pensions Policy Institute. By Gill Wadsworth
Pension Policy Institute director Chris Curry told delegates at the Corporate Adviser summit that fewer savers had sought professional advice in 2015 than 2014.
Curry said: “There has been a reduction in people taking advice before taking [annuities and drawdown] products. We don’t know why, it could be a shortage of advisers it might be that they are using Pensions Wise or it may be that they think they don’t need advice.”
LV= head of distribution Steve Lewis said this lack of advice was worrying and there was a real risk people using drawdown could be left with nothing.
Lewis said: “There is a high level of ignorance in the market. There are going to be individuals in drawdown who had no idea what they were going into and it will only take a few years before they run out of money in plans where they thought they had sustainable income.”
The PPI also revealed a marked increase in the number of savers taking drawdown from 11,500 in quarter one 2015 to 23,200 in the same period this year.
While drawdown is on the rise, lump sums remain the most popular means of accessing DC pots with 87,000 withdrawing cash in the final quarter last year.
However, Curry said the data did not take account of savers employing a combination of at retirement solutions, or whether they had additional means of income.
“At the moment all we know is how each individual pot is being used but we don’t know how many people are buying annuities, drawdown and taking lump sums from one pot. We don’t know about other sources of income or whether they are still working. We need to do a lot more research.”