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Press comment: Half of retirees take no advice before withdrawing thousands from pension


If you are covering FCA retirement income market data for 2018/19 released today, please see the following comment Quilter head of retirement policy, Jon Greer:

Jon Greer"FCA data released today makes for terrifying reading. The report reveals that nearly half of pension plans were accessed without regulated advice or guidance being taken by the plan holder. This may be a result of the fact that 4 in 10 of all the pension pots accessed had a value of less than £10,000 which might make those accessing the plan believe that they don’t have enough money to warrant getting financial advice in the first place. But it is important to think about the big picture and get advice on all the assets at your disposal in retirement, not only your pensions. And even if advice isn’t right for you, guidance comes at no cost to the public and everyone should seek guidance as a basic first step before taking cash from their retirement fund.

"Failing to get advice could have disastrous long term consequences unless you have a very good understanding of the tax landscape and are able to objectively plan a sustainable retirement strategy, which very few people can. Scarily, 350,000 pension pots were fully withdrawn at the first time of access; 90% of which were less than £30,000 in value. If you take a lump sum in a single tax year it is likely to result in having a much heftier income tax bill than if you chose instead to take the money out gradually.

"However, it’s clear that even among those who are choosing to take their money gradually through drawdown, many are not doing it in a financially prudent manner. The FCA’s data shows that 40% of retirees taking a regular income were drawing down their pot at an annual rate of 8% or more. This rate of withdrawal risks putting people at  risk of ruin if they deplete their pot too quickly and outlive their savings. There are few instances where this would make financial sense, making it likely that this is being done unadvised and these pensioners are greatly jeopardising their chances of a prosperous retirement. An appropriate withdrawal rate depends on what other assets you have at your disposal, other sources of income, your age, your investment return and so on but it is crucial to get professional advice so that you understand how your drawdown decision will impact on your pot over the course of retirement.

"While pension freedoms gave people the opportunity to take control of their own finances this does come with a huge degree of responsibility. As a result we need to make sure that the public are engaged with the consequences of poor pension planning and understand how valuable financial advice can be for not only the longevity of your pension pot but for avoiding huge tax liabilities too"

For more information contact

Alex Berry023 8072 626007741

Notes to Editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £118.7 billion in investments (as at 30 September 2019).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.

The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.

Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

Wealth Platforms includes Old Mutual Wealth UK platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

The Quilter plc businesses are being re-branded as follows: 

  • Quilter Financial Planning (previously Intrinsic)
  • Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
  • Charles Derby Group (becoming Quilter Financial Advisers)
  • Quilter Financial Adviser School
  • Quilter Cheviot
  • Quilter Investors
  • Old Mutual Wealth (becoming Quilter Wealth Solutions in 2020)
  • Old Mutual International (becoming Quilter International in 2020)

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.