The advice sector has been vocal about improving financial literacy in the UK over the last few years and a recent pensions survey has highlighted why clients need to engage more with their finances.
Canada Life surveyed 1,222 Brits aged over-55 with a private pension and found 49% are unsure or don’t know how much money they are planning to take out when they first access their retirement pot.
However, a quarter (25%) plan to take the cash free lump sum and draw an income, and 16% want to take a tax free cash lump sum and leave the remainder in a pension.
Some 3% plan to cash in all of their pensions when they first access them, while a further 6% said they would cash in one of their smaller pensions.
Fall foul with DIY investing
Andrew Tully, technical director at Canada Life, said: “Pensions can be a complicated area of financial planning, and none more so than when you are considering your options at retirement.
“That might explain how nearly half of our respondents were unsure or didn’t know how they were going to access their pension for the first time.
“Unfortunately, far too many people think they can adopt a DIY approach and navigate the myriad of options without help.
“This can catch people out, whether that be falling foul of the annual allowance rules or paying more tax than necessary on any withdrawals.
“A regulated financial adviser will be best placed, to not only help explain the choices when people are considering accessing their pension savings for the first time, but will also keep them on the right track as they progress their retirement journeys.”
