Fewer than half of consumers who take their full pension pot as a lump sum use an adviser, new data from the FCA shows.
Though the proportion of advised full withdrawals increased six percentage points between the second and third quarter of last year, only 47 per cent of consumers had gone through a planner to take their whole pot.
The proportion of advised full withdrawals was as low as 29 per cent in the first quarter of 2016, after falling from 37 per cent in the final quarter of 2015.
Only 33 per cent of annuities were bought through an adviser in the third quarter of last year, the data shows, down from 42 per cent at the end of 2015.
The proportion of advised drawdown purchases remained steady at 65 per cent, however.
The FCA’s data bulletin says: “The highest levels of adviser use continued to be for customers going into drawdown. Changes in this percentage are quite influential over the total advice proportion across the sector because drawdowns provide the second largest volume of new pension access.”
Pension freedoms on the wane
The FCA’s data, which covers July to September last year, also shows a 10 per cent drop in full cash withdrawals, an 8 per cent drop in first-time pension access and a 3 per cent drop in new drawdown policies, indicating that the pace of pension access is slowing nearly two years after the introduction of pension freedoms.
Though annuity purchases had reported a 17 per cent increase between April and June 2016, the latest data shows a 6 per cent fall.
There appears to be a slight improvement in customers shopping around though.
56 per cent of customers chose a drawdown product from their existing provider, down from 59 per cent between April and June. 58 per cent of customers chose an annuity product from their existing producer, compared to 61 per cent the previous quarter.
Retirement Advantage pensions technical director Andrew Tully, says: “I’m very disappointed to see that people are still not shopping around to get the best deal, either for an annuity or drawdown. The message is clearly not getting through so we need to find a way of breaking this cycle.
“We need to think more radically, as the pension freedoms should not be licence for people to receive poor value from their retirement choices. The issue here is to help people get advice. There is a strong correlation between those people who do receive financial advice and the number of people who shop around. I think its high time we had a debate about the merits of introducing a form of compulsion in shopping around.”