The state pension is increasingly seen as a safety net, with Britons being encouraged to set aside their own money for retirement. However, some people may still be at risk of not being able to secure a comfortable retirement, new research suggests.
A study has shown that defined contribution (DC) pensions that do not automatically offer a secure, guaranteed income for life can lead to poor outcomes for low-income Britons.
Guaranteed income arrangements have been much less common since the introduction of pension freedoms in 2015.
With more Britons opting for a guaranteed income, the University of Birmingham has warned that people face significant threats to security in retirement.
The investigation concluded that the existing system disadvantages those who are already vulnerable to poor pension outcomes.
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When they didn’t take formal advice, people felt unsure who to trust or turn to for important decisions.
Consequently, researchers have called for more government support on the issue.
They have also stated that Britons would benefit from price cap advice to help low-income people with help to reduce risk.
Dr. Louise Overton, Assistant Professor of Social Policy and Director of CHASM at the University of Birmingham, also reviewed the research.
He added: “Seven years after the introduction of pension freedoms, too many people are facing poor retirement outcomes because industry and government are not doing enough to protect them.
“Our research shows that Pension Wise does not offer adequate support, and those without access to good quality regulated financial advice, those with smaller pension funds and lower incomes, are at particular risk of adverse outcomes.
“We call on the government, industry and regulator to broaden the scope of monetary guidance, expand access to regulated advice and prioritize product innovation.”
A spokesperson for the Department for Work and Pensions (DWP) told Express.co.uk: “The government is committed to ensuring everyone has the support and information they need to make informed decisions about their financial future. Free and unbiased guidance is available available through Pension Wise and Money Helper, and we’re making receiving guidance from Pension Wise a normal part of the process when savers seek access to their defined contribution occupational pension.
“Together with the industry, we are also investing in simpler pension statements and dashboards to help make it easier for people to access and make sense of their pension information to support their retirement planning.”