A shrinking proportion of pension savers are seeking regulated advice when accessing their pension money, prompting concerns about retirement decision-making and employee financial wellbeing.
Data from the Financial Conduct Authority (FCA) shows that of the 962,000 pension plans accessed in 2024/25, just 31 percent were taken after receiving regulated advice.
The trend is most striking among those using pension income drawdown for the first time. Of the 350,000 pension drawdown plans accessed, just 45 percent involved advice. This represents a steep decline from 66 percent in 2018/19, marking six consecutive years of falling take-up.
The findings suggest that the risks for pension savers are growing.
‘Red flag’
“The figures show a 9 percent rise in pensions accessed to 961,575 which was largely driven by a 25 percent rise in drawdown plans to 349,992,” said Stephen Lowe, group communications director at retirement specialist Just Group. “While the numbers accessing pensions and using advice are up, the proportion of customers using advice has fallen for each withdrawal option since last year. The downward trend in use of advice for drawdown over time is particularly obvious and should be seen as a red flag.”
He added: “It is important that customers go into drawdown with their eyes open about the need to manage withdrawals to navigate the investment and longevity risk. Understanding these risks will help them improve the probabilities that their savings continue to deliver the income needed to last throughout their retirement.”
Lowe added that the number of pensions accessed after using the free, independent and impartial Pension Wise service (the UK government backed service) accounted for just 11 percent of money accessed.
“Regulators said they would uncover better stimulus, incentives and processes to ensure a higher
proportion of pension savers would benefit from using Pension Wise. This data confirms no progress has been achieved,” he said.
Tricky decisions
“Retirement decisions are some of the trickiest financial decisions that people will ever face. It’s worrying that most pensions accessed – nearly six in 10 – are taken without professional advice or guidance.
“We are just over a decade into the ‘freedom and choice’ policy experiment so these are still relatively early days for understanding what people are doing across all their pension pots and other assets.
“The industry has been developing new advice models to bring the benefits of regulated advice to a wider audience. In the future, targeted support options may help more savers.”
Ahead of the launch of the government’s targeted support framework, Lowe urged anyone thinking of accessing a pension to seek regulated advice or, failing that, they should at least take guidance from Pension Wise which will help to sense-check their plans and make them aware of common pitfalls and scams.
The government’s targeted support framework is set to allow authorised firms to provide “ready-made suggestions” to people in a bid to bridge the advice gap by giving individuals accessible guidance on complex financial choices.
The findings emphasise the importance of workplace financial education and access to trusted guidance as part of broader wellbeing strategies.
