Two in five of those aged 55-64 who are receiving an income or have taken a lump sum from their DC pension are still employed and a quarter are unclear how they have taken money out of their pensions, whether it's through an annuity or drawdown, the FCA's Financial Lives report has shown.

The report suggest that people have a distinct lack of understanding about the decisions they face when accessing their pension. One in six of those aged 55-64 who are receiving an income or have taken a lump sum from their DC pension are self-employed.

“This lack of understanding should give us all cause for concern," Just Group group communications director Stephen Lowe said.

"It indicates consumers are not well-informed or confident in the decisions they make about retirement incomes, and this is likely to lead to poorer outcomes for these savers over the longer-term. It’s clear there’s some confusion among consumers about what different products offer in the way of retirement incomes – one in ten thought income drawdown would provide a guaranteed income for life.

“There’s no doubt consumers would benefit from guidance when they access their pension pots and the need to offer consumers default guidance is becoming increasingly urgent. By automatically enrolling savers into a free, independent guidance session we will encourage better understanding and greater engagement which should in turn lead to better decisions and outcomes for savers.”

Share Story: