Editorial: Guidance can help savers make the right decisions, but not enough people are taking it.
The overwhelming majority of Pension Wise customers are satisfied with their overall experience of the government-backed service, according to a recent evaluation report.
Almost all customers who had an appointment with Pension Wise said it improved their understanding of their pension options.
The introduction of freedom and choice in 2015 sparked concerns people would blow their pension pots on sports cars or luxury holidays.
Indeed, travelling, hobbies and giving money to their children are the top three things employed people would most like to do when they retire, according to recent Aviva research. But the findings also showed a gap between people’s expectations for retirement and the reality they may be facing.
The Pension Wise evaluation report found that 36 per cent of non-users have spent their withdrawn pension pot money on holidays, cars, and other discretionary purchases, compared with only 14 per cent of Pension Wise users.
The Financial Conduct Authority has previously noted that Pension Wise “take-up remains low”, highlighting that in the third quarter of 2016 a total of 143,752 consumers accessed their pensions but just 13,990 had a Pension Wise appointment.
With the single financial guidance body set to launch next year, increasing people’s use of pensions guidance should be high on the agenda.
The new body will be an amalgamation of Pension Wise, the Money Advice Service and The Pensions Advisory Service. It is designed to give a more streamlined service to members of the public.
Experts have stressed that people are more likely to trust government-led projects.
But, if this new body is to be successful in helping savers make well-informed decisions, raising awareness among members of the public is crucial to boost take-up.
Until then, the risk that those not taking guidance or advice may empty their pension pots to fund holidays and cars is likely to continue.
Sophia Imeson is associate editor at Pensions Expert. You can follow her on Twitter @SophiaImeson and the team @pensions_expert.
