It is now five years since the introduction of pension freedom rules, but there is still widespread confusion about retirement options, particularly among the 50-plus age group.
One in four savers (26 per cent) in their 50s do not understand the options available to them from the age of 55, according to research by Fidelity.
The research also found a similar proportion (24 per cent) said they had not changed their retirement plans in the wake of these new reforms.
While most people welcomed these pension freedom rules, 25 per cent of those in their 50s think they have encouraged too many people to take their money as a lump sum and risk their future income, and 26 per cent believe that despite the reforms being a positive step, more education is needed.
April 2020 marks the five year anniversary of pension freedom rules, which radically reformed the way people can access their pension savings. Prior to this the majority of pension savers – including those in workplace DC schemes – used their pension fund to buy an annuity at retirement.
Now those reaching the age of 55 have an array of options, including cashing in their pension funds, drawdown or taking ad hoc payments from their fund.
Official statistics reveal that many retirees have flexed their new-found freedoms with nearly £33 billion withdrawn from pension schemes since March 2018.
Fidelity International director for workplace investing Maike Currie says: “Five years of pension freedoms also marks five years of pension confusion as people struggle to fit all the pieces together.
“Deciding how to access a lifetime’s worth of savings is no easy feat and this must be matched with desired income level, life expectancy, tax considerations and unexpected costs as life takes its various twists and turns.
“With this in mind it’s perhaps no surprise many people are lost in the pensions maze, confused by the options available to them and have decided to not make any changes to their retirement plans.”
She adds that there was now an opportunity to simplify the options available to people, and introduce new initiatives like the pension dashboard, to help support more people on their retirement journey.