More than a third of workers aged over 50 have yet to decide how they will access their pension savings, new research suggests. Some 34 per cent of workers in this age group remain undecided about how they will take their retirement money, according to research for Scottish Widows.
Knowledge gap among over-50s
The findings also indicate a gap in people's knowledge about the choices available to them. Nearly half (46%) of women over 50 who have not yet retired said they have little or no knowledge of their retirement options, compared with just over a third (35%) of men.
More than four-fifths (81%) of over-50s said they believe it is important to seek support before accessing their pension. However, nearly a fifth (19%) plan to seek advice only in the year they retire.
Industry calls for earlier engagement
Carolyn Jones, retirement director at Scottish Widows, said: “We need to bring the conversation forward.
“Too many people only fully engage in their retirement planning when they approach the point of taking action. By then, valuable opportunities to plan, prepare and make informed choices may already have been missed.
“The industry is making progress. Targeted support, guided retirement journeys, digital advice and workplace education are all helping people navigate increasingly complex decisions. But we need to go further.
“Our rallying cry is simple – engage earlier, understand your options and seek advice sooner.”
Ways to access pension savings
People with defined contribution pensions have several options for accessing their retirement savings. These can include taking some or all of the money as cash, using pension drawdown while leaving the remainder invested, or buying an annuity to provide a guaranteed income.
People can also leave their pension pot untouched until they need it or use a combination of different options. Up to 25 per cent of a pension can usually be taken tax-free, although limits apply, while further withdrawals may be subject to Income Tax.
Ms Jones added: “The earlier people think about their income needs, the more choices and confidence they have to achieve the lifestyle they want.”
Where to get help
People can get free guidance about their retirement options through the UK Government-backed Pension Wise service. Pension Wise is available to people aged 50 or over with a UK-based defined contribution pension and provides guidance on the different ways pension savings can be accessed.
The UK Government-backed MoneyHelper website also has pension guides and tools, while pension providers may offer retirement calculators to help people understand whether their savings are on track. Some people may also consider taking regulated financial advice before making decisions about their retirement savings.
The research included a YouGov survey of more than 6,200 adults and a further survey of 1,000 UK adults in February. More than 2,300 people aged over 50 were surveyed.
