Just : FCA retirement income data reveals declining use of advice and guidance

Thursday 18th April 2024

FCA retirement income data reveals declining use of advice and guidance when accessing pensions

An increasing proportion of pensions are being accessed without professional advice or guidance, raising concerns about the level of support being given to retirees making key financial decisions.

New figures from the Financial Conduct Authority this week1 show that 58% of pensions accessed in 2022/23 did not receive advice or guidance, compared to 48% in 2018/19. Nearly 429,000 pensions were accessed without professional help compared to 314,000 five years earlier.

Use of advice or guidance is lower in all categories of pensions compared to 2018/19 but is most marked in drawdown where the proportion taken with professional support has fallen from 75% to 61% and among UFPLS withdrawals where it has declined from 56% to 34%.

"Given the complexity of retirement decisions, this trend towards more pensions being accessed without professional advice or guidance looks like a massive red flag," said Stephen Lowe, group communications director at retirement specialist Just Group.

"Retirement decisions are some of the trickiest financial decisions that people will ever face. Yet the majority are shunning not only paid-for advice but even the government's free, independent and impartial pension guidance offered by Pension Wise which was created to help everyone accessing a pension."

Proportion of pensions accessed after advice or guidance is falling

80

70

Full withdrawal

60

UFPLS

20

Stephen Lowe said that the figures bode badly for the future when increasing numbers will be dependent on defined contribution pensions to supplement their State Pensions.

"We are now in the 10th year of the pension 'freedom and choice' policy and, while people are obviously enjoying having access to pension cash when they want, these are still relatively early days in terms of understanding whether people are managing those withdrawals sustainably.

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"It does reinforce the need for the industry to develop and promote advice models that can help people plan their retirement finances and for the government to work harder to encourage many more people to take up their entitlement to the highly-regarded guidance from Pension Wise"

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Notes to Editors

1 - FCA, Retirement Income Market Data 2022/23:https://www.fca.org.uk/data/retirement-income-market-data-2022-23

About Just

Just (Just Group plc) is a FTSE-listed specialist UK financial services company.

A leader in the individual retirement income, care and defined benefit de-risking markets, Just has been trusted to manage more than £26 billion of customers' retirement savings and has helped customers release over £6.5 billion from their properties.

Just provides the following wide range of products, advice and professional services to individual customers, financial intermediaries, corporate clients and pension scheme trustees:

Marketed Products

• De-riskingsolutions for pension scheme trustees who want to remove the financial uncertainty of operating defined benefit pension schemes;
• Individually underwritten retirement income products delivering a guaranteed income for life;
• Long term care plans that provide those people moving into residential care with peace of mind by knowing a regular payment will be made to the care provider for the rest of their life;
• Lifetime mortgages for people who want to safely release some of the value from their home.

Professional services

• Regulated financial advice and guidance services for individuals wanting help in using their pension savings and/or releasing some of the value from their home; and
• A range of business services tailored for our corporate clients, ranging from consultancy and software development to fully outsourced customer service delivery and marketing services.

The companies within Just Group are authorised and regulated in the United Kingdom by the Financial Conduct Authority and / or the Prudential Regulation Authority.

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The information contained in this press release is intended solely for journalists and should not be relied

upon by private investors or any other persons to make financial decisions.