TPT’s survey of its DC membership makes for predictably depressing reading (reporting from Professional Pensions)
Nearly half of defined contribution (DC) savers on the verge of retirement are unaware as to how they will access their pension savings, according to research by TPT Retirement Solutions
The firm’s survey of 2,500 DC members aged between 50 and 59 years old, conducted in February, found 49% of those nearing retirement did not know how they will access their pension when they reach it. It showed one in six planned to take their pension as a lump sum and 23% said they would draw it down over a period of time, while just 6% said they planned to purchase an annuity…..
Despite the firm’s survey showing members approaching their retirement were more confident and engaged about their pension than other demographics, the research showed 30% of all pension savers admitted they did not have sufficient knowledge on how to make decisions concerning their retirement and were unsure how they would access their savings.
This is shocking stuff and we should be ashamed of our pension system that is letting savers down. The Pensions Trust are thinking about this seriously, working out how to make their workplace pensions – workplace pensions. But in the meantime , their members are confused.
TPT also found less than one tenth (8%) stated they had consulted a financial adviser for assistance with their pension, while an even smaller proportion (6%) said they had consulted MoneyHelper’s Pension Wise service.
As well as concerns over making decisions about their pension, the survey showed a considerable proportion of respondents expressed apprehension as to whether their savings would be sufficient to last the duration of their retirement. It found over a third (37%) feared they would run out of money, while 36% cited concerns they would not have sufficient funds for a comfortable standard of living in retirement.
TPT Retirement Solutions DC director Philip Smith said: “The lack of confidence and knowledge expressed by savers, particularly when approaching retirement age, is worrying. Similarly, the reluctance to pay for professional advice may result in high levels of anxiety and a lack of preparedness as savers approach retirement.
I am not surprised that TPT members are not keen on buying advice and less than thrilled by Pension Wise. We should not be getting people to pay for the information manual on how to spend the money they saved, that should be part of the deal. As for Pension Wise, this service has been going 9 years now and should be getting a good reputation. But it isn’t getting any kind of reputation as only a handful of savers are using it.
This is not hard, TPT “savers” should be able to contact TPT and ask how they become TPT pensioners. That should be their default option. If they want to exercise investment pathways like drawdown, or cash-out or run-on, that’s up to them, but everyone at TPT should have a pension option presented to them either via an annuity , CDC or a scheme pension.
This may all seem novel to those for whom a DB pension is something that can only be saved for if you are a public sector employee, but there are some of us who think that it is the right of everyone with in a workplace pension scheme.
We need the freedom not to exercise our freedoms. We need more pension for our money.