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The Actuary The magazine of the Institute & Faculty of Actuaries

Majority of over-55s do not fully understand pension freedoms

Just one third of people aged over 55 believe they have a good understanding of the pension freedoms introduced in 2015, according to research by MetLife.

Over-55s confused by pension freedoms ©Shutterstock

In addition, it shows that 54% of people in this age group find the new rules confusing, and 76% want a pause to further reforms.

This is despite the pension freedoms enabling consumers at a minimum pension age to take savings as cash, buy an annuity, use drawdown without any limits applied, or a combination of all three.

“Pension freedom has been a qualified success delivering real change but it needs to be improved in order to deliver on supporting savers and advisers in providing a pension system fit for the 21st century,” MetLife UK wealth management director, Simon Massey, said.

“But the pace of change over the past two years has been bewildering for savers and it is clear they want a pause for breath in order to better understand the opportunities from the new rules.”

The research reveals new worries that savers have as a result of the pension freedoms, with 36% of over-55s fearing they could lose their funds to fraudsters, while 43% are concerned their pension funds will not last them long enough.

It was also found that around 57% believe current low rates and stock market volatility mean their retirement savings are not sufficient to fund retirement.

This comes after research by Prudential earlier this year showed 21% of over-55s believe access to financial advice at work would help them save more, while 20% would back having retirement planning seminars at work.

Those studied also believe walk-in financial guidance centres would boost saving, while nearly a third would like a tax-break for savers taking face-to-face professional financial advice.

“It is clear that there are short-term and longer term improvements which can be made in order to ensure that savers and advisers benefit from real pension freedom with advice and financial education at the top of the agenda, enabling better understanding of the choices available,” Massey added.

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