Is Pension Wise scaring users away from drawdown?

Pension Wise jenga

Data published by the FCA appears to show Pension Wise sessions could be pushing people away from entering drawdown contracts in favour of annuities and cash withdrawals.

This month the regulator released figures collected during Q3 2015 on how savers are accessing their pensions. It includes data on whether savers who go into drawdown or buy an annuity have been to Pension Wise, seen an adviser or neither.

According to the FCA, just 9 per cent of people who go into drawdown say they have been to Pension Wise, while 14 per cent of all those who bought an annuity used the service, as did 25 per cent who cashed their entire pot in.

Tisa policy strategy director Adrian Boulding says: “I’m reading from that Pension Wise is clearly putting people off drawdown.

“The numbers are sufficiently stark to make me think there must be something going on during the discussions on drawdown – they must be saying to people ‘oh this is terribly risky, you can run out of money and the performance could be poor’.

“The problem is it depends what they do instead – maybe they’ll take all their money out and put it into a building society.

“The stats also show 25 per cent of the people who cash in their pension have been to Pension Wise, so maybe they are thinking ‘all this pensions stuff is terribly complicated if I don’t cash it in I’m not dealing with something I know and understand’.”

A Treasury spokesman says: “Pension Wise is unique in offering a free and impartial service for people looking to understand their options. As a part of any appointment delivered, Pension Wise guiders give equal weight to each option available before setting out the choices available, this may include seeking financial advice.”