People approaching retirement are often turning to Facebook groups to help understand their retirement options and make decisions about their pension savings, despite knowing the information they find may not be correct, research from People's Pension has revealed. 

The latest findings from the group's New Choices, Big Decisions study showed that, a decade on from the introduction of the 2015 pension freedoms, many are still "sleepwalking" into retirement, unsure how to turn a pot into a pension and focused mainly on taking their full tax-free cash lump sum.

Despite many attempts to improve engagement through planning tools, nudges, and guidance services, savers continue to find pensions confusing and generic information hard to apply to their situation.

While pension providers continue to offer more information on retirement planning, the research suggested that communications often arrive at the wrong time or in the wrong tone, with little evidence that they change behaviour.

Instead of turning to providers, People's Pension found that many lack confidence picking a retirement product and turn to Facebook retirement groups for help, finding them easier to navigate than official websites or guidance services.
 
However, this has resulted in many savers continuing to make short-term, convenience-led choices, rather than planning for sustainable lifetime income.

In particular, People's Pension found that tax-free cash was rarely part of long-term planning, as, rather than treating this money as part of a long-term retirement plan, most people treat this as additional disposable income and quickly spend it on home improvements, gifts, or paying off debt, with any money left often moved into a low-interest cash savings account.

The study also found that whilst most people are continuing to take the full 25 per cent tax-free lump sum, this is often true even for those who are still working and have significant amounts of cash available in other savings. 

However, People's Pension suggested that the introduction of default decumulation products could help improve retirement outcomes, with its research suggesting that certain design choices could make these work even better in practice. 

Indeed, the study found that opt-outs work better than opt-ins, age 75 is the optimal age to introduce longevity insurance, and flexibility around early-retirement withdrawals is essential.

It also stressed the need to address negative perceptions of annuities, warning that this attitude remains entrenched amongst many savers, driven by worries about dying too soon to get payback from savings and wanting to leave money to families.

Commenting on the findings, People's Pension director of proposition, Kirsty Ross, said: “This research shines a light on just how difficult it still is for the average saver to make sense of retirement saving after ten years of pension freedoms. 

"Savers are still faced with too much complexity and the wrong kind of support, so it’s no surprise that many are turning to social media for help instead of professional sources. The system isn’t giving people the clarity or confidence they need to make decisions that will shape the rest of their lives.
 
“The reality is that the nice, clean vision for retirement of policymakers and pension providers rarely plays out smoothly in practice. Real-life retirement journeys are far more complex and, as our study clearly shows, people need simpler but better targeted support, underpinned by strong default pathways. 

"Providers and policymakers must now work together to ensure new guided retirement solutions offer the flexibility, simplicity and inclusivity that savers need. These products must be backed by clear, well-timed communications that truly connect with savers and help them feel confident about their pensions throughout retirement.”

“The vast majority of savers don’t want to become pension experts; they just want straightforward options that help them turn their savings into a steady income. 

"Guided retirement solutions have the potential to deliver that simplicity and security. The next step is to make sure these products are designed around people’s real needs, with clear communication and practical guidance that helps every saver make the most of their pension.”
  

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