“Pension freedoms figures for 2019 reveal we are entering a stable stage of the pension freedom era. At the exciting dawn of pension freedoms many people looked to withdraw substantial sums. Now, four years later, things have calmed down. We expect to continue to see the average value hover around the £3,500 mark.
“Dramatic concerns the UK public would use that freedom irresponsibly now seem over cautious. However, it has not all been smooth sailing for pension freedoms and we are still trying to combat the tsunami of challenges that this new era has presented. High on the agenda is how people invest their money during this stage of life. This is a challenge that is getting trickier as volatile markets prompt people to become cautious and opt for cash, the equivalent of hiding the funds under the mattress.
“This has been high on the regulator’s agenda, which is why we saw a mammoth amount of pension regulation from the Financial Conduct Authority yesterday. This included the introduction of investment pathways for non-advised consumers in drawdown. The logic behind pathways is hard to argue with. They encourage people into an investment that is broadly designed around them and with their needs in mind. However, we cannot ignore the risks that go along with it and must not forget that for many advice will continue to be key. How the money is invested is not the only concern and advisers can help people shop around for the best deal, make sure the amounts withdrawn are prudent and sustainable, and ensure people don’t pay too much in tax.”