We need to help people decide what they want out of retirement and then we need to make sure they can actually achieve it

“I think it’s a really interesting challenge for us in the industry to help [people] simply and straightforwardly find ways to use their retirement pots in the way they might want to,” said Graham Vidler, director of external affairs at the National Association of Pension Funds addressing the audience at the NAPF’s annual conference.

He was referring to the problems faced by many of those approaching retirement who, baffled by the wide array of choices out there, find themselves unsure what to do.


This fear and confusion was something experienced by a number of participants who took part in qualititative research carried out by the NAPF.

Described as “part diary – part ethnographic exposure” – the project followed 24 individuals aged between 55-70. Participants were expected to keep a diary of every time they thought about their pension or took any action on it.

Most people involved were extremely financial aware, but not always about pensions.

“All of them had this real sense of financial responsibility. They all wanted to do the right thing. They were all used to being on top of their finances and in control… but it is not always clear that sense of financial awareness and being in control translated into pensions,” Vidler explained.

Those who took part could broadly be split into three groups:

  • Those who were planning of taking advantage of the freedoms to make their pots work harder
  • Those on the ‘mad dash for cash’ who were taking advantage of tax-free, cash lump sums
  • Those who were paralysed by all the new choices out there, who had decided to do nothing

Vidler was most concerned by the people who were doing nothing. “In a sense they’re the most worrying group because they look at their options, they’re scared and they don’t know what to do or where to get support.”

People’s ability to take advantage of the new freedoms varied wildly and was often dependent on their personal experience. One example was somebody who had combined all his pots and “lost the lot”. His experience left him unwilling to even think about retirement saving until he had finished bringing action against the person who had advised him.

They’re scared and they don’t know what to do or where to get support”

Other examples included the impact of divorce (particularly on finances), the attitudes of people’s parents, and a family history of early death.

“Personal circumstances and things that have happened to people over decades can have really profound and lasting effects on people, their attitudes and their ability to take advantage of the [pensions] freedoms,” said Vidler.

Low uptake of Pension Wise doesn’t help. None of the group had used the service prior to taking part in the study.

More alarming - quantitative research also carried out by the NAPF found that only one in five people who made a retirement decision had consulted Pension Wise, while only one in 10 of those who were seriously investigating their position had used it.

The problem, argued Vidler, is not the quality of Pension Wise. “They liked what they saw when they used it. I think it’s a problem of awareness.” he explained.

Most people were relying on their providers, friends and family or the internet for guidance.

They liked what they saw when they used it. I think it’s a problem of awareness”

Independent financial advice was popular with those people who had a long-standing relationship with an adviser, but for everyone else IFAs didn’t really come into the picture.

The current financial advice market review may clear the way to getting people the right help. But without a concerted effort to either make people aware of Pension Wise or give people access to cost-effective advice, too many will fall through the cracks.

Even once people have made a decision, this is only part of the story. The industry also needs to make sure that the action someone has decided on is available to them.

One participant, Howard, decided “after much deliberation, cogitation and whatever” – that he wanted to take a lump sum, followed by a five year annuity and then another lump sum.

The problem, argued Vidler, will be when Howard goes to take out his money and finds that it is not possible for him to do precisely what he wants.

The problem will be when Howard goes to take out his money”

Freedom has been well-publicised and people will understandably be frustrated if they are unable to do what they are expecting. Particularly if they are trying to carry out well-thought out plans as result of speaking to Pension Wise.

After all, there’s no point in educating people about choices and helping them make decisions if they can’t then act on those decisions.