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Savers ignoring FCA risk warnings on pension freedoms


Pension savers are showing total disregard for the FCA’s risk warnings that were brought in to protect retirees from the most damaging choices at retirement.

New figures produced by Citizens Advice show just 1.6 per cent of people who received the warnings – which are delivered by providers – changed their mind as a result.

The survey of 500 over-55s who accessed their defined contribution pots reveals the so-called ‘second line of defence’, brought in just a month before the reforms went live, is not working.

Retirement Advantage pensions technical director Andrew Tully says: “It looks like people have decided what they want before they even get to guidance. Once people have made up their minds, it is really difficult to change them, and any intervention at that point is probably too late.”

In contrast, 20 per cent of consumers changed their plans after an initial conversation with a provider, the research also shows.

Citizens Advice suggests the regulator consider changing the rules so consumers are given warnings earlier in the process.

Citizens Advice chief executive Gillian Guy says: “Risk warnings are the last line of defence in protecting consumers from making poor choices about their pension, so it’s concerning they are having a very limited impact on people’s decision making.

“The FCA was right to introduce risk warnings and it’s good to see they plan to deliver these earlier to consumers wanting to access the secondary annuity market.  To help consumers choose the best option for them, risk warnings should come earlier in the process across all pension options and be tailored to a person’s circumstances.”

Just Retirement group communications director Stephen Lowe says: “Risk warnings are part of a package of consumer protection measures and should not be looked at it in isolation.

He adds: “People have saved for what may be as long as 40 years, and there is a chance their savings may need to support them for a further 40 years, so taking 40 minutes or 4 hours to work through the options and ensure they are equipped to make an informed decision does not feel disproportionate.”



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There are 13 comments at the moment, we would love to hear your opinion too.

  1. Dick Sprinkler 17th June 2016 at 9:11 am

    Why is anybody shocked by this !

  2. Makes you proud to be British.

    If we had a survey showing that 98% of consumers did whatever the government told them, then I would be worried.

    The survey does not show that most of the people who had made a stupid decision went on to carry out that stupid decision, despite all the obstacles the Government has thrown in their way. It shows that they had already changed their mind *before* they got the risk warnings – when they had the initial conversation with a provider.

    If you want to assert that more than 22% of people accessing their money were making bad decisions, evidence please.

  3. Yet again the famous edict is proven:

    “No one went broke underestimating the intelligence of the British public”

  4. Of course, with the FCAs heightened awareness of client behavioural traits they will have carried research and factored this in so probably nothing of concern here.

  5. Really? I thought we all read terms and conditions, product warnings and instructions to the letter with everything else we do – so why people don’t pay any attention to this baffles me.

  6. Further evidence that risk warnings are far more effective in protecting firms from compensation claims, than they are at influencing decisions by customers.

    Those who have presented risk warnings as a panacea to poor outcomes should really sit up and take notice of these findings.

  7. If, at a time when public confidence in pensions as a result of 30 years of prejudicial government meddling is at an all time low (and antipathy towards them at an all time high), you tell people they can now cash out all their pension funds and benefits in one go, what did the government expect? That people would even bother with guidance or take a scrap of notice of warnings published by a regulator which itself is hardly held in high esteem? An extremely irresponsible and ill-considered piece of legislation.

  8. Never mind.

    The govt got a boost to the economy in April 2015, plus all that tax.

    When it all goes pear shaped someone else will cop it.

  9. Only 3 words to say at this ” L O L”

  10. And this was unexpected?

  11. Are we surprised by these findings.

    It does however show that despite all the warning, individuals carry on regardless as their desire for cash, property betterment, new property, car or holiday is generally all consuming when they know they can have the cash irrespective of the consequences.

    As an industry we’ve known this for year but why are the powers that be surprised?

  12. Living the Dream Dream ..... 19th June 2016 at 10:23 pm

    Don’t forget that the money belongs to the individual and the individual has the choice to take THEIR money if they so wish.
    Pre RDR you were all ranting on about your clients should be the ones to have the choice of whether they pay a fee or commission etc etc ……. or as advisers is it now move able goal posts to suit?
    Please don’t rant on at me about ‘saving them from Financial despair’ when or if the money runs out as there are multiple more who spend everything they earn from month to month and save nothing to ‘live off the State ….. they are the ones that need your education!!

  13. David Cathcart 25th June 2016 at 5:04 pm

    Presumably, when it is all spent and they want someone to blame, they will swear black is white that no risk warnings were ever given, or if they were they were conned into drawing all this money by that financial adviser. And you know what the FOS will believe every word

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