Maps aware living squeeze could see savers dip into their pensions

Speaking at FTAdviser’s Later Life Summit, Maps’ chief executive Caroline Siarkiewicz noted that while she was not seeing people dipping into their pension pots yet to cover living costs, her team is wary this is a behaviour it could start to see.

Siarkiewicz said: “What we’re going to be monitoring in the pensions space are two things primarily. One: are people starting to think about saving less as their finances are squeezed? 

“And also, are they thinking that actually one way for them to get through this is to dip into their pension pot?”

Maps seeks to provide a single gateway to help consumers on pensions, while also offering broader money guidance, such as on debt.

It is, however, starting to see UK pension holders ask how they can maximise their income, and how they can access affordable credit.

“Where we are at the moment is the beginning. Typically, it takes a while before people start to engage with services.

“There will be a growing number of people who fall behind with their payments and fall into debt, so we’re making sure we’ve got sufficient capacity available across our funded organisations to deal with the potential increase in that.”

Inflation rose to a 40-year high in April, in what some experts have described as the worst inflation crisis seen in a lifetime.

Bank of England governor Andrew Bailey has said “there isn’t a lot” the central bank can do about inflation forecasts of 10 per cent, blaming a series of unprecedented shocks to the UK and wider global markets.

Customers largely go to Maps — a body sponsored by the Department for Work and Pensions — because they are told to, either by a provider or fellow organisation.

Siarkiewicz said engaging people with their pensions is “challenging”, echoing a sentiment felt widely across the industry, hence the introduction of government-led initiatives such as the pensions dashboard.

“I used to work in the debt advice sector… I thought that space was bad until I discovered in the pensions space engagement is even lower,” she said.

Siarkiewicz said the impact of pensions dashboards will be “revolutionary” in solving part of this challenge, though she admitted people knowing where all their pensions are and how much they will provide in retirement is “only part of the story”.

This is why Maps is focused on broadening out its own dashboard to include wraparound services. Currently, the organisation is working with partners to test them.

These include a “retirement planning hub” it is building, and a review of Maps’ current retirement pathway tool.

Maps also employs guides, who do not provide financial advice, though many are former financial advisers. Where appropriate, consumers will be signposted to a financial adviser, however.

“Someone who has been through guidance, generally, is a better informed client for a financial adviser,” said Siarkiewicz.

This article first appeared on FTAdviser.com