Over half (59%) of respondents believe they do not require pensions and retirement advice when planning to make a withdrawal from their pension pots, according to research by Money.co.uk.
The study, which surveyed 669 over 55-year-olds with a pension, also revealed that just one in five (20%) of respondents that are making a withdrawal plan to take advantage of Pension Wise’s free 30-minute advice session. These respondents also cite this as a reason for not paying for the service of an independent financial advisor (IFA).
The research also found:
- One in five (20%) respondents are willing to pay for financial advice when they make a withdrawal from their pension. This figure falls to 13% for male respondents.
- When asked why they feel they do not need financial advice, 28% of respondents think it is a waste of money, 27% cannot afford it and 15% want to access their money quickly without the ‘hassle’ of taking advice.
- Of those respondents that are planning to pay for advice, 82% say they are doing so because they want to ensure that they get such a major financial decision right.
- Respondents are willing to pay an average of £253 for financial advice, while 60% say they would pay £200 or less for it.
- Around a third (38%) of respondents making a withdrawal say they fully understand the tax implications of doing so.
Hannah Maundrell, editor-in-chief Money.co.uk, said: “Our concern is that people will rush into a decision without fully researching the long-term impact or costings, simply because they need cash fast. After all, many people making a withdrawal from their pension are doing so to keep up with day-to-day living expenses.
“Looking before you leap and all those other clichés really are the name of the game, especially when you’re gambling a financial future that you’ve worked so hard to save for.”
Matthew Brown, private client partner at Thomas Miller Investment, added: “The research from money.co.uk highlights a very important issue, especially for employers who are funding workplace pensions at vast expense.
“Thirty eight per cent of respondents did not feel that they understood the complex tax rules and options at retirement. Not only will an incorrect decision at retirement be very costly for the individual but their employer may well end up effectively wasting thousands of pounds of contributions.”