comment from Emma Byron, Managing Director, Retail Retirement Income, Legal & General Retail Retirement following the research from retirement firm Responsible Life, that shows how retirees with smaller pension pots are taking the biggest financial risks, leaving them acutely vulnerable to a downturn.
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Consumers have much more choice now in how they use their pension pots, but for many people financial planning is unchartered waters. Currently, as an industry we leave it very much up to the consumer to navigate their way through this new territory. This is leading thousands to make uninformed decisions about retirement savings. At our recent Retirement Income Riddle roundtable, I talked about our responsibility as an industry to fix this. Not only is the lack of engagement leaving some more dissatisfied in later life, but our poorest and most vulnerable are even taking risks that could see them run out of money altogether.
“Our research with Demos suggests that up to 50,000 people in the lowest income bracket who either defaulted or moved their pension into investments could now be finding life in retirement more difficult as a result. There is a clear lack of awareness too – our previous research found that more than a quarter of over-55s didn’t know they had to pay tax if they took their savings as cash.
“It’s not just about whether consumers choose annuities or drawdown or a combination of the two, it is about the right products being selected to meet the customer’s individual circumstances and needs. That means giving people access to information and advice they want and understand, and when they want it, so they can make informed decisions and enjoy their best possible retirement.”
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