The TUC has raised concerns that hundreds of thousands of savers are going without retirement advice as it calls for a wider remit for Nest to deliver retirement income products.
Based on data from the Association of British Insurers and the Pensions Policy Institute, the TUC says 300,000 savers took out cash lump sums without getting advice. It suggests no one who took out a lump sum between April 2015 and March 2016 took advice on doing so.
The TUC says 15 per cent of those taking out drawdown products last year did so on a non-advised basis, while 74 per cent did not use an adviser to buy an annuity.
The TUC says savers are being left to “fend for themselves” in making complex decisions about longevity and investment, and as a result may fall into financial hardship, take out unsuitable products or fall prey to scammers.
It wants to see Government-backed Nest able to offer low-cost retirement income products.
TUC general secretary Frances O’Grady says: “Pension freedom may sound great on paper. But it is not liberating to leave hundreds of thousands of people to fend for themselves in what is now a very complicated and expensive part of the pensions market.
“The inevitable result, if nothing changes, is a rise in scams and more older people suffering hardship.
“The new pensions minister must set Nest free to offer the sorts of retirement products that are so clearly needed by low and middle-income savers.”
The Department for Work and Pensions has just closed its consultation on whether Nest should be able to offer retirement products such as drawdown and allow more people to join the scheme. Providers have raised concerns about whether Nest would offer value for money, and questioned why a Government-backed scheme set up for auto-enrolment should expand into retirement income.