Or rather, wake up and think about your pension pot, especially if you are over 50!
To encourage consumers to actively think about their retirement provision, the Financial Conduct Authority is proposing that ‘wake-up’ packs should be sent to customers from the age of 50 and then every five years until their pension pot has been fully accessed.
The proposed measures come as the new pension freedoms allowing access to pension pots before the age of retirement has seen a proportion of consumers spend the money that they had earmarked for retirement on luxury holidays and cars, adopting a’ live in the moment’ approach.
In a report published today, the FCA found that 60% of consumers were not taking advice about drawdown i.e. accessing the funds in the pension pot and were not sure or only had a broad idea of where their money was invested. A third of consumers were wholly invested in cash with around half of these likely to be losing out on income in retirement.
The proposed measures are designed to help consumers when making decisions about what to do with their pension pot and to provide ongoing support once they have accessed it.
The new ‘wake-up’ packs will have to include a single page summary or ‘pensions passport’ and will also have to include specific retirement risk warnings.
It is recognized by the FCA that consumers need help in making their choices and understanding the ramifications and cost implications that accessing their pension pots may have. It is also proposed that information should be provided annually to those who have accessed their pension pot to make the charges clear and help the consumer to make more considered choices.
Andrew Anderson, IFA and Director of Blackbear Financial Group Ltd comments:
‘The concept of the wake up packs is a great idea to promote more awareness of the need to ensure that you will have enough income in retirement to maintain your desired lifestyle and hopefully consumers will be encouraged to actively engage in planning ahead’.
It is never too early to plan ahead for your retirement provision. If you are thinking of setting up a pension or accessing a fund that you already have, BlackBear Financial Group can help you in outlining your options and investment solutions for generating retirement income or income for expenditure now based on your personal circumstances.
Call us today on 0151 305 2305 or email us at firstname.lastname@example.org to find out more.