AJ Bell commissioned ComRes, a market researching company, to interview 250 Brits aged 55 and over who have entered pension drawn down since April 2015 and have not purchased an annuity.
The research found that 34% of people surveyed had chosen to see a professional financial adviser compared to just 12% who went to Pension Wise.
Additionally, the research found that 40% did not seek any help at all, with the rest relying largely on friends and family.
A need for change
Tom Selby, senior analyst at AJ Bell, said the data highlights the need for the UK Finance and Guidance Bill, which is currently waiting its third reading in the House of Lords on 21 November, to find an effective way to get more people engaging with their pension decisions.
“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,” Selby said.
“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,” he said.
Despite the need for the Bill, Selby said more debate and scrutiny is needed over its latest amendment.
This amendment proposes making guidance mandatory “before accessing or transferring defined contribution, defined benefit or money purchase benefits.”
This means 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”.
Timing too late
Selby said this recent amendment to the Bill needs further scrutiny and debate as most people who get to the point of accessing benefits have already made their mind up and want their funds immediately.
“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,” Selby said.
“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,” he said.