DIY Pension advice on the rise

DIY-Pension-advice
DIY-Pension-advice

Article by Phil

The latest figures from the FCA analysed by Just Group (19/7/22), show a worrying increase in the number of people relying on DIY pension advice for their retirement.

Figures show that over 100,000 pension products were purchased without the involvement of any pension advisers in 2021. These are what we call decumulation products taken out when people want to cash in on their retirement income. The overall percentage of non-advised product sale is now over 40% of all cases.

The figures are based on guaranteed income products and drawdown products only. They do not include defined contribution pension withdrawals, which are also often done on a DIY pension advice basis. These number over 300,000 a year. So, the non-advised figure could be close to 400,000 or as high as 60% if the real numbers were tracked.

Back in 2015 when the pension freedoms came into force the number of non-advised sales was on 33%, so the rise to over 40% is significant. Especially when you consider the money we’re talking about. An average of almost £170,000 for drawdown products for example.

The government continues to offer an appointment (telephone) with the Pension Wise service for people to discuss their options. This is not advice, but at least allows people to get more information, rather than relying on their own DIY pension advice.

The rise in non-advised product sales is even more concerning when you set it against the backdrop of rising scams. The FCA revealed at the same time that in the six months to September 2021 they received almost 17,000 scam enquiries. That is an increase of 33% on the previous year.

29,000 people visited the FCA’s Scam Smart website to check out the latest news and try to protect themselves from scams. Not surprising when XPS Pensions reported that scam flags were raised on over 90% of pension transfers in June. (Although there are teething issues with the new scam reporting process which probably makes this figure look high).

This is perhaps a suitable time for the Association of British Insurers to launch its new Pension Attention campaign. Starting in the autumn the campaign aims to reach over 30 million people with the strap line “it’s time to pay your pension some attention.

It is!

Income Drawdown Explained

Christina Clegg Financial Planning Services explains how Income Drawdown from your pension works.

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