More than a third of workers aged over 50 still haven’t decided how they will access their pension savings in retirement.
This is according to Scottish Widows’ latest Retirement Report, which found that there is a gap between how people expect to use their pensions and what retirees actually do.
Around 46 per cent of workers expect to take their tax-free cash as soon as they can, compared with 64 per cent of retirees who said they had done so.
It also found that 20 per cent of workers expect to buy an annuity before retirement, compared with 28 per cent of retirees who actually chose one.
The findings highlight the range of decisions people face as they approach retirement, including how to access their pension, manage tax and create an income that lasts.
Four in 10 over-50s who are still working have little or no understanding of the different ways they can access their pension savings, and only 25 per cent are confident they know all the main options.
According to the report, women are less likely to feel informed, with 46 per cent saying they have little or no knowledge of their retirement options, compared with 35 per cent of men.
Most people recognise the value of getting support, with 81 per cent of over-50s saying it is important to seek advice or guidance before accessing their pension. However, 19 per cent plan to do so only in the year they retire, and 15 per cent do not know when they will seek help.
Scottish Widows said delaying these decisions could leave people with less time to consider their options and potentially result in unexpected tax bills or lower income later in retirement.
It notes that technology could also help people understand their options, with 42 per cent saying they would use AI tools to explain complex pension terminology and translate industry jargon into plain English.
The findings suggest there is an opportunity to engage people earlier and make retirement decisions easier to understand.
Scottish Widows retirement director Carolyn Jones says: “Turning 55 opens the door to pension savings built up over a lifetime, but while access to that money brings opportunity, it also brings important decisions that can shape retirement for decades to come.
“That’s why we need to bring the conversation forward. Too many people only fully engage in their retirement planning when they approach the point of taking action. By then, valuable opportunities to plan, prepare and make informed choices may already have been missed.
“The industry is making progress. Targeted support, guided retirement journeys, digital advice and workplace education are all helping people navigate increasingly complex decisions. But we need to go further.
“Our rallying cry is simple – engage earlier, understand your options and seek advice sooner. And, as an industry, we have a shared responsibility to give every customer the knowledge and support they need. For example, Scottish Widows’ app helps customers better understand what they have in terms of pension savings, track lost pots and decide what to do with them in just three simple steps. The earlier people think about their income needs, the more choices and confidence they have to achieve the lifestyle they want.”