Nearly five million people aged 50-70 are at risk of making poor decisions with the new pension freedoms taking place this April, research shows.
According to a study commissioned by the National Association of Pension Funds (NAPF), most people aged over 50 postponed seeking help with decisions on their retirement until they were close to retirement.
Middle-income earners were most at risk under the new pension reforms because "the decisions they will now have to make under the new reforms carry the greatest risk/benefit", according to the report. These earners, with an average individual income of £30,000 when working and £20,000 when retired, total 4.8 million people.
Graham Vidler, director of external affairs at NAPF, said: "These reforms will directly affect approaching fivemillion people in the next five years. There is very little time until freedoms start but there's still a great deal of uncertainty about what people should do to make best use of the new pension reforms. The overwhelming majority of the people in the middle of these reforms tell us they want a secure income for their retirement but there's currently no clear route for them to achieve this."
To help middle-income earners make decisions on pension reforms, Vidler urged savers to take action. Vidler said: "For these reforms to give savers a chance to manage their pension savings effectively, savers need three things: awareness and understanding of the guidance they can expect; outline pathways to help them make the best use of their money throughout their retirement; and products that are easy to understand, reliable and good value."
The study found people from other income groups, including high earners and those on low incomes, would not be as affected.
The research consisted of a combination of telephone and online interviews and was based on a sample of 1,243 adults aged 50-70, with the results "weighted to be representative of the population".
Meanwhile, the Financial Conduct Authority (FCA) has written to pension providers and outlined plans to introduce additional protection for savers who access their defined contribution pension pot in April.
The FCA has called on firms to provide risk warnings when people make pension decisions, including around tax implications. Firms should also ask consumers about circumstances that could affect their decisions, such as health and marital status.
Christopher Woolard, director of strategy and competition at the FCA, said: "The decisions consumers make about what to do with their pension pot are important and in some instances these choices are irreversible. We want to make sure that people have the help they need to make those choices."