There has been a sharp rise in the percentage of pension savers accessing their defined contribution (DC) pension pots without advice, according to new analysis.
Retirement firm Just Group, which carried out analysis of recent FCA data, found that more than a third (34%) of the 205,641 of pots that entered drawdown during 2021/22 did so without advice or guidance.
The 34% figure is sharply up on the 25% who failed to get advice or guidance three years earlier.
Just says that more than half (53%) of the 705,666 defined contribution (DC) pension pots accessed for the first time in 2021/22 were taken by ‘DIY dippers.’ These are pension savers ‘dipping into’ their pensions, often for the first time.
Several studies recently have suggested that pension savers are dipping into pensions to meet the challenges of the cost of living crisis and to help family members.
Just Group says the FCA data shows ‘no support’ – advice or guidance – was given for just over one in three pension pots that entered drawdown during 2021/22.
No advice or guidance was accessed for around two-thirds (65%) of the 395,237 pensions fully withdrawn, compared to 67% the previous year.
Annuity purchase is the only area that has seen sustained improvement in the numbers taking advice or guidance. The increase comes after a sharp rise in annuity rates this year making annuities a more attractive option than in previous years.
Stephen Lowe, group communications director at Just Group, said: “Many hundreds of thousands of pensions are being accessed or emptied without professional support, increasing the risks that pension savers may achieve poor outcomes, pay unnecessary tax or fall victim to scams.”
