Pension freedom confusion
As a result, savers are unsure about how to best fund their retirement.
The latest Retirement Income Strategies and Expectations (RISE) survey from Franklin Templeton has identified a severe lack of knowledge and a great deal of scepticism around the pension reforms.
Of the 2,000 people surveyed by Franklin Templeton, only 16% believed the pension reforms would enhance their ability to meet their retirement goals.
A staggering 58% felt they do not know enough about the pension reforms to re-evaluate their income options at the point of accessing their pension savings.
The research also found that 68% of people, who have awareness of the pension freedom reforms do not expect to reconsider their retirement income options as a result.
With the pension reforms being rushed through parliament since they were announced in the Budget last March, it is little surprise that awareness is low and confusion is high.
There simply hasn’t been enough time for the government to run a high-profile awareness campaign around the new pension freedoms.
We hope this will still come in due course; it will take more than the recently launched and frankly awful Pension Wise TV adverts to make enough people aware of the pension freedom reforms, and where they can best get the help they need to make the right choices with their pension pots.
Once awareness of the pension reforms is improved, the best thing for people approaching retirement to do is to seek independent financial advice.
Whilst the Pension Wise service can offer some helpful guidance, we expect the outcome from the majority of these 45 minute guidance sessions to be ‘speak to an independent financial adviser’.
There is little in the way of meaningful decision making that can be made about complex retirement income options in the space of a 45 minute guidance session, whether that is face-to-face or over the telephone.
It will be interesting to see how awareness of the new pension freedoms increases once they are introduced on 6th April 2015, or whether confusion will continue to reign supreme.