Yesterday the FCA published the latest edition of its Retirement Income Review
Latest data from @TheFCA Retirement income market interactive analysis 2023/24 https://t.co/LKoNDr4JT7
— Tom McPhail (@PensionsMonkey) September 26, 2024
We learn that the number of pension plans accessed for the first time surged in the past year, as economic pressure continues to mount, FCA data has revealed.
The regulator’s latest retirement income market statistics, published today (26 September) showed the total number of pension plans accessed for the first time increased by 19.7% to 885,455 in 2023/24 from 739,652 the previous year.
Around 30% of pension plans accessed for the first time in the past year were accessed by plan holders who took regulated advice.
This was down from 32.9 % the previous year.
Quilter head of retirement policy Jon Greer said this ongoing drop suggests that more people are navigating the complexities of pension withdrawals without professional help.
This, he said, raises concerns about the long-term sustainability of their retirement strategies.
Sales of annuities saw the biggest jump, from 59,163 in 2022/23 to 82,061 in 2023/24 (38.7%).
Sales of drawdown increased by 27.9%, from 218,183 in 2022/23 to 278,977 in 2023/24.
The overall value of money being withdrawn from pension pots rose to £52.1m in 2023/24, from £43.2m in 2022/23 – an increase of 20.6%.
Greer said the substantial increase indicates that more individuals are turning to their pensions to manage their financial needs.
This, he suggested, is likely influenced by the cost-of-living crisis “forcing people to dip into their pension pots” to supplement other forms of income.
The regulator and the government have made it clear that they intend to improve the UK pensions system.
The FCA published its thematic review of retirement income in March 2024.
It suggested that while there are no systemic issues in retirement income advice practices, there are pockets where they could be improved.
This includes approaches to determining income withdrawal and gathering information to demonstrate advice suitability.
The new Labour government yesterday (25 September) closed its call for evidence on the first phase of its landmark pensions investment review.
The review will aim to boost investment, increase pension pots and tackle waste in the pension system.
Greer said:
“This review is expected to prioritise clearer guidance and support, helping individuals make informed decisions and avoid detrimental financial mistakes.”
The simplest way to help people access their money without detrimental retirement mistakes is to let them draw a pension. IFAs commenting on the news seem to agree
What a mess
what a mess
I agree, it really is time to put in place some member protection, or the saving of a generation will be go wasted.
People want pensions and they don’t want to or can’t find advice on how to do their own. The Government’s plan for a default decumulation option for workplace pensions cannot come a moment too soon.