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Pension savers left to fend for themselves, says TUC

financial adviser with older couple Image copyright Thinkstock
Image caption People retiring should get proper advice, the TUC believes

More than 300,000 pension savers a year are being left to fend for themselves when they retire, says the TUC.

It claims that over 80% of people using their pension pot to buy a retirement income get no proper advice about it.

The TUC is basing its figures on what happened in the year following the pension "freedoms", first introduced in April 2015.

However the government said free help was available from the Pensions Advisory Service, and Pension Wise.

In its analysis, the TUC said no one who withdrew a cash lump sum from their pension in 2015/16 got professional financial advice.

Just 15% of those setting up a drawdown policy received official help.

By contrast, 73% of those buying an annuity - an income for life - did consult a financial adviser.

Image copyright Pension Wise
Image caption Pension Wise offers free guidance, but not individual advice

Changes

The TUC said it was concerned that financial advice was too expensive for most people, and that many low and middle-income savers could buy the wrong products, or fall victim to pension scams.

"Pension freedom may sound great on paper," said Frances O'Grady, the TUC general secretary.

"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."

A similar warning was sounded last week by the pension provider LV=, which said pensioners could become part of a "mis-buying crisis".

It said use of Pension Wise - the government's guidance service - should be made compulsory for savers accessing their pension pots.

Pension Wise offers free general guidance to those over 55, but not tailored advice.

The changes introduced in April 2015 mean that anyone over the age of 55 can withdraw as much money as they like from their pension pot, subject to income tax.


Pension Calculators

Image copyright Thinkstock

State pension calculator DWP

Combined state, workplace and DC calculator, from Standard Life

Should I delay buying an annuity? Hargreaves Lansdown

How much can I earn from a DC pot? Money Advice Service


"We want everyone to have a financially secure retirement, which is why we have introduced wide-ranging reforms to make pension saving easier and clearer," said a spokesperson for the Department for Work and Pensions (DWP).

The TUC also wants the government-backed National Employment Savings Trust (NEST) to offer retirement incomes as well as a savings scheme.

The government is considering the idea at the moment, with submissions closing on 5 October.

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