In a recent survey concerning Defined Contribution (DC) pension schemes, a notable trend emerged: a significant majority of retirees are choosing to withdraw their pensions in full cash sums. Established auto-enrolment providers, namely Now: Pensions, Cushon, and The People’s Pension, report that virtually all their members are opting for this mode of withdrawal.
The Workplace Pensions Into Retirement Report, presented by Benefits Expert sister publication Corporate Adviser, sheds light on this trend, indicating that over 80% of scheme members associated with other major providers, such as Nest, Aviva, and Legal & General, are also making similar choices.
The report segmented its analysis based on different pension pot sizes. Members with pension pots valued at over £30,000 were less inclined to cash in their pensions, except for those with Now: Pensions.
Collating insights from advisers and consultants in the DC workplace sector, the report pinpoints growing concerns among two-thirds of advisers about the increasing level of cash withdrawals. This raises questions about long-term financial security and the implications for retirees making such decisions.
Another focal point of the report is the observed disparity in at-retirement functionalities between providers. Some providers’ offerings are severely limited, leaving retiring employees little choice or guidance as to how to manage their money through retirement.