Pension raiders warning: 72 per cent of savings being plundered BEFORE retirement
SO many pension savers are raiding their pots before retirement that it has become a ‘new norm’, the financial regulator has warned.
72 per cent of pension savers have raided their pots before the age of 65
In the wake of new pension freedoms, almost three quarters (72 per cent) of funds saved for old age are now plundered before the saver hits 65.
And a lack of consumer trust in pensions could lead to some workers missing out on more money or paying too much tax, said the Financial Conduct Authority.
Former pensions minister Ros Altmann said the FCA’s study was “another wake-up call for the pensions industry to up its game and look after customers”.
Baroness Altmann said: “The pensions industry needs to wake up to the tremendous new opportunities offered by pension freedoms and auto-enrolment.”
Pension changes were launched in 2015 to give over-55s more choice of how they use their pension pot
The pensions industry needs to wake up to the tremendous new opportunities offered by pension freedom.
Pension changes were launched in 2015 to give over-55s more choice over how they use their pension pot, rather than being required to buy an annuity - a guaranteed income for life.
More than half (53 per cent) of pots accessed have been fully withdrawn, with 90 per cent of them below £30,000.
Ninety four per cent of consumers making full withdrawals had other sources of retirement income as well as the state pension.
More than half (53 per cent) of pensions accessed have been fully withdrawn
Pension expert warns start saving 40 years before retirement
Pensions drawdown, which allows savers to take an income from their pension fund while keeping it invested, has become much more popular.
Twice as many pots are moving into drawdown than annuities.
Twice as many pots are moving into drawdown than annuities
But more people are not taking independent financial advice and are typically following the “path of least resistance”, accepting drawdown from their current pension provider without shopping around and missing out on better deals, the FCA warned.