One in four 55-64-year olds still unaware of pension freedoms

A quarter (25%) of people between the ages of 55 and 64 are still not aware of pension freedoms, despite the reforms being introduced more than six years ago, new research from Fidelity International has revealed.

The investment manager suggested that a lack of knowledge of the reforms can mean some people may be unaware of all the considerations associated with deciding to access their pensions early, such as making sure they have enough income to last throughout retirement.

Recent figures from the Office for National Statistics (ONS) reported that over a quarter of furloughed workers are aged 50 years and over, equating to 1.3 million people. The ONS also stated that three in 10 older workers currently furloughed think there is a 50% chance or higher that they will lose their job when the scheme ends.

Out of those who are aware of pension freedoms, Fidelity found that 41% of those aged 55 to 64 – many of whom will have had the opportunity to access their pension under the reforms – believe the decision to raise the age limit for taking pension income from 55 to 57 in 2028 is “a good idea”.

The wealth manager, whose research was based on a study among 3,000 UK adults, suggested this demonstrates an understanding of the potential consequences of taking a pension too early as well as the benefits of giving investments more time to grow.

Fidelity investment director for workplace investing, Maike Currie, commented: “The reality is that during the pandemic, many people may have had to reduce their work hours, their savings or the amount they put into their pensions, which will all have a serious knock-on effect now we are coming out of lockdown. As a result, those over 55 may be looking to pension freedoms as a safety net.

“However, despite it now being over six years since pension freedoms were introduced, it’s concerning that a significant number of people approaching retirement still don’t know what they mean in terms of accessing their pensions. This lack of awareness and understanding reinforces the need for greater education and engagement when it comes to pensions and retirement planning.

“While the advent of pension freedoms has provided flexibility for many and given retirees more control over their later-life savings, it has also increased the chances of those who don’t fully grasp the considerations of drawdown running out of income during retirement. Both the benefits and these risks are something that employers should be aware of.”

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