SAVERS FAILING TO SEEK ADVICE WHEN IT COMES TO TAKING LUMP SUMS OUT OF PENSIONS
Hundreds of thousands of pension savers have withdrawn cash lump sums under new freedoms without getting any financial advice, a new study reveals.
The TUC said 300,000 savers in defined contribution schemes were being left to “fend for themselves” when making important retirement decisions.
Thousands more bought annuities despite not consulting an expert following so-called pension freedom changes last year, it added.
People approaching retirement are having to make difficult decisions about their future plans, including choosing between complex, often expensive, pension products.
But the TUC warned that those on low incomes risked buying the wrong products or falling victim to scams.
It called for the government-backed National Employment Savings Trust (NEST) to be given the power to offer retirement income products.
The TUC wants savers to have access to robust, low-cost retirement income products. But commercial providers have been slow to offer these to customers.
General secretary Frances O’Grady said: “Pension freedom may sound great on paper, but it is not liberating to leave hundreds of thousands of people to fend for themselves in what is now a very complicated and expensive part of the pensions market.
“The inevitable result, if nothing changes, is a rise in scams and more older people suffering hardship.
“The new pensions minister must set NEST free to offer the sorts of retirement products that are so clearly needed by low- and middle-income savers.”
A Department for Work and Pensions spokesman said: “Pension freedoms are a major success and we remain committed to supporting savers by giving them choice over how they use their hard-earned savings.
“Before making a decision, we encourage everyone to speak with The Pensions Advisory Service and Pension Wise, which offer free, impartial guidance to consumers so they can fully understand the options available to them.”