One in five over 55s who have cashed in their pensions under flexible access rules have spent all the money, according to new research.
The Pension and Lifetime Savings Association (PLSA) says 51% of 400,000 retirement savers had taken cash from their pensions in the first six months of flexible access, which started in April 2016.
Although half had reinvested their cash, 18% had blown the lot, the research revealed.
Around a fifth had bought an annuity with their savings to provide a guaranteed retirement income.
The PLSA asked retirement savers about the advice they had taken about spending or investing their pension cash.
Unhelpful advice
The majority who bought annuities purchased from their pension providers rather than shop around.
The figures for those taking broader financial advice, 39% spoke to their pension providers, the same number discussed their finances with an IFA, 22% consulted the free government agency Pension Wise and 17% chatted their options over with family or friends.
Flexible access rules require anyone with a pension pot of more than £30,000 to take financial advice.
A third of those who took advice said what they were told was unhelpful.
“Deciding what to do with savings at retirement is new territory for advisers and savers since the introduction of flexible access,” said a PLSA spokesman.
Blank canvas
“The traditional paths are now a blank canvas for millions and we have found that people want to make the right decisions but are worried about making the wrong decisions because they are in uncharted territory.
“Someone has to pick up the ball and run with this to map pension freedom territory.”
The PLSA recommends that advisers have a kite mark and providers should signpost savers towards reliable products that should work for them.”
Although 300,000 retirement savers are expected to take flexible access cash from their pensions next year, the rate is slowing, according to provider Royal London.
“The number of people withdrawing money and the amount of cash they are taking is settling down,” said a spokesman.
“This suggests that pent up demand has reduced as people held back from taking their pensions to benefit from the new rules.”
