Just over a third (34%) of people who took part in the research* chose to see a professional financial adviser compared to just 12% who went to Pension Wise. However, while it is encouraging that almost half of respondents sought some kind of impartial advice or guidance, 40% didn’t seek any help at all, with the rest largely relying on friends or family.
The data reinforces how important it is for the Financial Guidance and Claims Bill, which is due for its third reading in the House of Lords on 21 November, to find effective measures that increase the take up of the Government’s new single guidance body and get more people engaging with their pension decisions.
AJ Bell believes the latest amendment to the Bill in the House of Lords needs further debate and scrutiny. The amendment proposes making guidance mandatory “before accessing or transferring defined contribution, defined benefit or money purchase benefits”.
Providers would have to ask customers “at the point at which they require access or a transfer of their pension assets” if they had received guidance. If the answer is ‘No’, the provider would be required to “provide access to such information and guidance before proceeding”.
Tom Selby, senior analyst at AJ Bell, comments:
“Financial advice or guidance can be extremely valuable and it is clear from our research that a huge proportion of people are not benefiting from this in relation to their pensions. There needs to be a mechanism to encourage more people to seek advice and guidance but the most recent amendment to the Bill needs further scrutiny.
“The majority of people who get to the point of accessing benefits have already made their mind up and want their cash straight away. Forcing them to take guidance at this stage is arguably too late. It would cause a delay in people accessing their money which would undermine the fundamental principle that people aged over 55 now have the freedom to access their pension savings how and when they like.
“If the Government wants to ensure people take guidance it might be better for some kind of standard fact sheet on their retirement options and appointment card for the new guidance body to be provided to everyone well ahead of the point they want to access their benefits, say age 50. This should happen alongside a fundamental rethink of the way the regulator requires providers and advisers to communicate with customers, with a fresh focus on simplification and getting messages to savers effectively.”
*AJ Bell commissioned ComRes to interview 250 British adults aged 55+ who have entered pension drawdown since 6 April 2015 and have not purchased an annuity. The research was carried out online between 20th and 21st July 2017. ComRes is a member of the British Polling Council and abides by its rules. Full data tables are available on the ComRes website, www.comresglobal.com