Pensioners left to "fend for themselves", says TUC

Over a quarter of a million pension savers are left without the right financial advice when making decisions for their retirement, according to a report by the Trade Union Congress (TUC).

According to the study 300,000 savers in defined contribution schemes were unadvised between April 2015 and March 2016.

The figures were collected following the pension “freedom” changes introduced in April 2015, which allowed anyone over the age of 55 to withdraw as much money as they like from their pension.

Out of the 75,100 people who have drawdown contracts, which allow them to take money from their pensions, 11,265 were unadvised.

The changes also meant savers in defined contribution schemes no longer needed to automatically buy annuities, which guarantee them a lifetime income. From the 81,473 who bought annuities during the period, 60,290 were unadvised.

The result of this was that retirees were left in the dark about complicated decisions on their likely lifespans, investment plans and choosing between complex and often expensive pension products.

The union federation fears that this lack of financial advice will run the risk of many low-income and middle savers will end up buying the wrong products or falling victim to scam.

“'Pension freedom’ may sound great on paper. But it is not liberating to leave hundreds of thousands of people to fend for themselves in what is now a very complicated and expensive part of the pensions market. The inevitable result, if nothing changes, is a rise in scams and more older people suffering hardship,” said TUC General Secretary Frances O’Grady.

Pension provider LV= gave their own warning on the issue last week saying pensioners could become part of a "mis-buying crisis".

The TUC are calling for the government-backed national employment savings trust (NEST) to be given the power to offer retirement income products.

“The new Pensions Minister must set NEST free to offer the sorts of retirement products that are so clearly needed by low and middle-income savers,” said O’Grady.

The government is currently considering the suggestion, with submissions closing on 5 October.

The TUC also said use of the government's guidance service Pension Wise should be made compulsory for savers accessing their pension pots. The limitation however with Pension Wise is that it only offers free general guidance rather than tailored advice.