It is good people are researching their retirement options but search engines expose them to risks
Search engines have a lot to answer for. We no longer need to think for ourselves, with the solution to everything at our fingertips. One of the major problems with the internet is that people can become an “expert” on a topic rather easily. Look something up, read a couple of articles and away you go.
This was highlighted in our Working Lives Report, which found almost a third (31 per cent) of people said that, when it comes to long-term savings, they trust themselves and their own research when looking for guidance.
That is pretty worrying, especially in a time of defined contribution pensions and freedom and choice. Savers need to be smart with their money to ensure they do not run out during retirement.
With annuities, tax-free cash, drawdown, blended solutions, uncrystallised funds pension lump sums and the like to consider, making decisions based on the results from a search engine is unlikely to lead to the best outcome.
That is not to say people should not take the time to research their options.
But the problem with potentially not being able to identify what is best for their retirement finances is that people are not able to see what is worst.
Pension scams are getting ever more sophisticated and it has never been harder for legitimate providers to protect their customers. At 55, people are free to cash in their pots and do whatever they like with their savings, including investing in high-risk, fraudulent and even non-existent schemes.
For people who have been taken in by these types of investments, sadly they may not even know it yet. Pension freedoms are still less than three years old, so those who withdrew their money to place it in a fraudulent investment with promised (or even guaranteed) double-digit returns could have some very distressing news coming their way.
It is easy to sit here and say “I can’t believe people are taken in by some of this guff” but a lot of people do not understand investments well enough to know a 10 per cent return is almost never guaranteed (at least during recent economic times).
It is also important to understand the relentless nature of these scammers.
Recent research we commissioned found that consumers last year were bombarded with 2.2 billion nuisance calls and texts relating to an injury-related claim, pension, PPI or other insurance-related matters.
Since pension freedoms were introduced in 2015, pensions-related nuisance calls are also estimated to have increased by around 2.7 million.
In my experience, advertising does not always get you the first time, but if you begin to regularly see the same message over and over, something you may ordinarily dismiss can quickly become desirable. When you think about it in these terms, it is easier to understand why people get sucked in.
That is why advisers are there to do more than crunch the numbers. They can be there to protect clients from going it alone and making poor decisions that could have devastating consequences.
John Lawson is head of financial research at Aviva