Since the introduction of pension freedoms in 2015, people have been bamboozled by the wider choices available at retirement.

The term ‘Lamborghini pensioner’ was coined when retirees discovered that they
could ‘blow’ their pension on a fast car.

Pension freedoms meant that they could cash in their entire pension by transferring it into a single defined contribution pot and accepting the tax ‘hit’.

In a lot of ways, we only add to the confusion. The bombardment of information at this stage can come from multiple providers – from insurers to third-party administrators.

Their varying attempts at making their correspondence as clear as possible can be easily undermined by complex disclosure requirements, dense text and specialist terminology.

Maybe that’s why most members zoom straight into the numbers when assessing their options. The problem is that this leaves them without a full understanding of how each option will affect their lives.

The answer is far from obvious to people outside the pensions industry. Pension Wise is unable to give advice. And many retirees are understandably reluctant to hand over a chunk of their finite pension to independent financial advisers.

The only answer is to embed financial education into every stage of people’s lives – from the school to the workplace – reinforced by government-supported pension awareness campaigns.

There are schemes with great benefits and retirement options. But without member education and guidance, they may be wasting their time and money. We need to start now.

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