The Financial Conduct Authority (FCA) produced a report called the Retirement Outcomes Review (MS16/1.3) in June 2018 which commented on how benefits were being taken since the Pension Freedom and Choice legislation was introduced in April 2015.
They warned that using Non Advised Drawdown many consumers took the path of least resistance and remained with their current provider. This lead to them paying higher fees and charges, being exploited by their own inertia because providers didn’t have to be competitive. By switching to a lower cost provider consumers could increase their income by 13%.
25% of consumers not taking advice are paying 1.5% of their pot each year in charges.
The report found that product charges can vary from 0.4% to 1.6%. Therefore, picking the right product provider for your Drawdown plan would seem to be essential.
The report states that people do not move from their existing provider because of ‘trust’, ‘it’s easier and quicker’ and a ‘better the devil you know’ attitude. It turns out that this ‘lazy’ approach is expensive. If you are uncertain about what to do or need a safe pair of hands to support you, Simply Retirement can help.
Simply Retirement offers both a ‘Full Advice’ service or a ‘Non Advised Drawdown’ Service. This allows providers costs to be compared.
They also found that many consumers lost out further because of poor investment choice. One third of consumers not taking advice were invested entirely in Cash. They concluded that consumers who invested in a mix of assets could increase their retirement income by 37% over 20 years.
At Simply Retirement we seek to ensure that you are invested in line with our Investment Process which pre-filters mainstream pooled funds which are ‘risk’ rated or risk targeted and have been through our due diligence and then provide a multi-asset solution that undergoes strict governance and regular reviews by an investment committee.
The report concluded that many consumers simply just did not know where they were invested. Clearly, this is something that Simply Retirement can help you with.