Withdrawal behaviours are among the top concerns of a third of pension providers, whilst two thirds fear this concern will only grow in the future as more and more people start to rely solely on a defined contribution pension.

A new report from the Association of British Insurers (ABI), ‘Future Proofing the Freedoms: Supporting customer decisions about pension withdrawals ‘, published today found pension industry experts fear that many people are withdrawing from their pension without any advice or guidance, meaning that in future many could run out of money in retirement.

A change in the regulatory rules for advice and guidance is needed so the majority and not the minority get access to support for pension withdrawals. For DC pensions savers, deciding how much to withdraw from their pension can be confusing as it requires an understanding of the impact of inflation, how the tax system will affect you and how long you may need your money to last. Providers are currently limited in how much support they can offer without giving a personal recommendation, and therefore giving financial advice.

Changing this would enable providers to help pension savers with withdrawals by telling them about the implications of taking a lump sum; talking a customer through what a sustainable income could look like and prompting a customer that people in their situation often secure a guaranteed income at a particular age.

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