Head of DC Consulting, Lee Hollingworth responds to the worrying trends emerging in the FCA Retirement Outcomes Interim Review:

“Accessing pension pots early has clearly become commonplace. It is massively worrying in this context to see the FCA’s report showing that 52% of those who are cashing in their pension pot are deciding simply to invest into another savings or investment vehicle.  By doing so they are missing out on a more tax-efficient savings option. This behaviour is totally irrational and highlights the lack of trust and ownership that people feel towards pension saving. Worse still the review highlights that 57% of consumers with a Guaranteed Annuity Rate gave it up for cash.

“All bets are off, post pension freedoms, as consumer protections and good practices that existed before have been eroded away leaving consumer futures at risk. It is crucially important that savers get the right advice if they are to avoid poor financial outcomes when they retire. It is of enormous concern to see the FCA reporting that 30% of consumers are accessing their funds without advice. One option might be to make a consultation with Pensions Wise compulsory before an individual is permitted access to their pension fund”