UK financial watchdog concerned about what people are doing with their pension savings
The UK’s Financial Conduct Authority has flagged concerns about the way in which people are using their pensions since the introduction of landmark rules around retirement savings in 2015.
The FCA on Wednesday said that it had identified several issues, particularly relating to advice and competition. A more extensive report is due next year.
Under rules introduced in 2015, savers are able to access their retirement savings without having to buy an annuity, or income for life. The FCA said that accessing pension pots had become “the new norm” and that the majority of people are now choosing to take their pensions as a lump sum rather than gradually as regular income.
Over half of pots accessed have been fully withdrawn, according to the FCA, however most of those are “small” with 90 per cent below £30,000. It said that 94 per cent of consumers making full withdrawals had other sources of retirement income in addition to the state pension.
The FCA said that, “although it is still early days for the market”, it had identified five key concerns since the change came into effect.
One of their worries relates to over half of fully withdrawn pots not being spent but instead being moved into other savings or investments.
Read full content here: Independent