London, Tuesday 28 July 2020: New data released by PensionBee shows that pensions have become disconnected from retirement, with a fifth of pension savers aged 55 and over saying they would withdraw their pension in order to take control of it.
PensionBee, a leading online pension provider, has found that 20% of those surveyed would withdraw their pension “for control”, which often means moving it to a savings account or other investments. 32% of those surveyed said they would withdraw their money due to concerns about the pension falling in value, while 12% would withdraw their pension because they felt pressure to do something with it. A further 17% said they would withdraw their pension to meet day-to-day expenses.
Of those surveyed, one in three (35%) did not know how to find out about the amount they could expect to receive in retirement, while two thirds (69%) disclosed that they have not been asked what they want to do with their pensions by their pension provider in the wake of the coronavirus pandemic.
The survey of almost 1,000 members of the general public aged 55-70, found that only 52% had given due consideration to how they would manage throughout their retirement, despite already reaching the age at which they could enter non-advised drawdown should they wish.
In the UK, savers are also considering accessing their pensions as a result of the coronavirus pandemic, with 40% saying they would withdraw from their pensions if they became unemployed.
Romi Savova, Chief Executive of PensionBee, commented: “Delays in the Financial Conduct Authority’s implementation of the Retirement Outcomes Review coupled with findings that pension providers are consistently failing their customers – by not asking them how they might want to access their pension, or offering guidance on sustainable withdrawal rates – are having a detrimental impact on the vast majority of consumers.
“With so many savers accessing their pensions to feel more in control, as the effects of coronavirus continue to bite, there’s an increased risk of more and more savers using money already withdrawn from their pensions to cover their day-to-day spending needs. It’s imperative that pension providers help their customers develop a sustainable withdrawal strategy and caution against spending their retirement savings on unnecessary expenses and even plastic surgery, as recently reported in Australia (1). Without intervention from providers, who are best-placed to incorporate guidance into their service, there’s a very real risk that savers could outlive their pensions.”
Appendix
Table 1: Motivation for accessing a DC pension
| Reason for considering a withdrawal | Proportion of consumers (%) |
|---|---|
| Due to worry about the pension falling in value | 32% |
| To take control and put it in a savings account or other investments | 20% |
| After hearing about government rule changes | 20% |
| For extra income to meet day to day expenses | 17% |
| Due to pressure to do something with it | 12% |
| To spend it on something special | 9% |
| Due to not trusting their pension provider | 5% |
| Due to the charges being too high | 4% |
| Due to retiring or stopping work | 3% |
Source: PensionBee, April 2020. Figures have been rounded to the nearest percentage. Respondents could select multiple answers.
Table 2: Understanding of expected pension income
| Level of understanding | Proportion of consumers (%) |
|---|---|
| Understood how to find out expected retirement income | 65% |
| Didn’t understand how to find out expected retirement income | 35% |
Source: PensionBee, April 2020. Figures have been rounded to the nearest percentage.
Table 3: Contact by pension providers regarding the coronavirus pandemic
| Level of contact | Proportion of consumers (%) |
|---|---|
| No contact at all | 69% |
| To say that there may be problems contacting the provider due to the coronavirus pandemic | 12% |
| To explain the implications on the pension and how it might be accessed | 10% |
| To prompt to seek impartial advice or guidance before accessing the pension | 7% |
Source: PensionBee, April 2020. Figures have been rounded to the nearest percentage. ‘Level of contact: Other’ excluded. Respondents could select multiple answers.
Table 4: Level of thought given to how they will manage financially throughout retirement
| Level of thought | Proportion of consumers (%) |
|---|---|
| Great deal of thought | 52% |
| Little thought | 39% |
Source: PensionBee, April 2020. Figures have been rounded to the nearest percentage.
Table 5: Would consider accessing their pension as a result of the pandemic
| Drawdown status | Proportion of consumers (%) |
|---|---|
| Those who have tried to or considered accessing their pension | 54% |
| Those who had already started accessing their pension | 43% |
| Those working, and not already accessed their pension | 40% |
| Those who have not yet tried to or considered accessing their pension | 28% |
Source: PensionBee, April 2020. Figures have been rounded to the nearest percentage.
