More than half (53 per cent) of DC pension pots accessed for the first time last year were by ‘DIY dippers’, who did not receive any support from a financial adviser or the government’s free Pension Wise service.
According to figures from the Financial Conduct Authority a total 705,666 DC pension pot were accessed for the first time in 2021/22. Although this data relates to pension pots, rather than individuals (with some savers accessing more than one pot on retirement) this still suggests hundreds of thousands of people are making major decisions about their retirement finances without any form of advice of guidance.
The figures show that 205,641 pension pots entered drawdown during 2021/22. In around of third (34 per cent) of these cases no advice or guidance was received. Analysis of these figures by Just Group say that this is significantly higher than the 25 per cent not receiving advice three years earlier.
In addition no advice or guidance was used for around two-thirds (65 per cent) of the 395,237 pensions fully withdrawn. This is slightly lower than the 67 per cent the previous year, but still shows the majority of people get no guidance or support before cashing in their pensions.
Annuity purchase is the only one of the four options that has seen sustained improvement in the numbers taking advice or guidance.
Just Group communications director Stephen Lowe says: “From a consumer protection standpoint, it is crucial these figures are closely monitored. 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.”