Press release

Government mustn't drag heels over financial advice reforms

  • Pension freedoms are proving popular but the increased choices make retirement even more complex
  • Financial advice can help people make this difficult decision and get more from their money, but many don’t plan to take advice or guidance
  • LV= wants Government to speed up reforms to advice market to increase the numbers using advice and help people get a better deal

One year on from the start of the pension freedoms, research from LV= reveals that while many people are keen to use the new flexibilities, large numbers are still not planning to get help to make the most of their money.

LV= has found three in ten (31%) of those aged over 50 plan to take, or already have taken, a lump sum from their pension. This increases to 47% of those who will retire in the next five years.

Nearly half (46%) plan to save the lump sum or reinvest it, while other popular options are using it for home improvements (23%), day-to-day living costs (19%), and paying off debts (18%).

Deciding what to do with pension savings to make them last throughout retirement is a complex decision, however many aren’t getting advice to help with this difficult choice. Four in ten (41%) of those within five years of retirement don’t plan to take any advice or guidance at all. Only one in five (21%) will take regulated advice, while just 14% will use Pension Wise.

The main reasons why people don’t want to, or haven’t, used a financial adviser are lack of trust (23%), thinking that free guidance is sufficient (22%) and the cost (20%).

There is also a lack of awareness of the value of advice. Of those that have already retired and didn’t take advice, only one in ten (10%) think taking financial advice would have helped them make their money last longer or get a better deal. Yet, there are clear benefits to taking advice and shopping around - those who shop around for an annuity get, on average, 23% more.1

LV= believes that the large numbers of people not taking advice could lead to a ‘mis-buying’ scandal. The Financial Advice Market Review has recognised the need to address the advice gap and made 28 recommendations on how to do this. However these reforms must be introduced without delay to ensure people can start benefiting as soon as possible.

Richard Rowney, Managing Director of Life and Pensions at LV=, said: “Deciding what to do with pension savings can be overwhelming so it’s extremely worrying that so few people plan to take advice or guidance when they retire. The Financial Advice Market Review recommendations will help address the advice gap, but it’s now crucial the Government and regulator don’t drag their heels in making these reforms a reality. They must work closely with the industry to increase trust and improve access to affordable, regulated advice without delay, otherwise we risk a ‘mis-buying’ scandal.”

 

Notes to editors: 

1. Based on analysis of MAS survey from April 2015.

About LV=

LV= employs over 6,000 people and serves over 5.8 million customers with a range of financial products. We are the UK's largest friendly society and a leading financial mutual.

When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.

We are currently the UK's number one brand for Insurance and Investments, according to the 2015 YouGov Brand Index Buzz Rankings.

We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations such as ASDA, Nationwide Building Society and a range of trade unions.

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF.

Press contact

Jon Sellors
Head of Corporate Communications
020 7634 4447
07711 701 806