With stock markets rising, house prices growing, and annuity rates at their highest in years, 2025[i] could be the year many Brits achieve their retirement dreams. But Steve Butler, Managing Director of Pension Potential, warns that too many are at risk of sleepwalking into a financially uncertain future due to a lack of advice and knowledge.
Data from the Financial Conduct Authority (FCA)[ii] reveals that 69% of pension pots accessed for the first time in 2023/24 were done so without professional advice. Alarmingly, many savers are withdrawing unsustainably, with most opting for annual withdrawals of 8% or more – putting their retirement funds in jeopardy.
Annuities, which provide guaranteed lifetime income, have surged in popularity, with sales up 38.7% year-on-year[iii]. Yet many savers still lack the knowledge to make informed decisions, putting them at risk of outliving their savings as the cost of living rises[iv].
Butler warns: “The UK faces a retirement crisis due to a growing knowledge gap. Without intervention, thousands could run out of money in their later years.”
Research from the Pensions and Lifetime Savings Association (PLSA) shows that nearly three in ten savers don’t know how to increase their pension contributions, and 24% don’t even know how much they’re saving. Among those over 55, a third don’t know how much they or their employer are contributing to their pension pots.
With 13.6 million people at risk of not saving enough to meet the Pension Commission’s target income level, the need for advice and guidance has never been greater[v].
Hybrid Solutions Close the Advice Gap
Butler says: “Understanding pension projections and saving enough is essential to securing a comfortable retirement. Most need around two-thirds of their salary to maintain their lifestyle – but that’s unachievable for many.”
To address this, hybrid pension solutions that combine technology with expert advice are growing in importance. Pension Potential, recently recognised by Defaqto[vi] for its innovative approach, is helping bridge the advice gap by offering simple, accessible digital tools combined with personalised guidance.
Its tools make retirement planning straightforward. These include a Lifestyle Explorer, which visually demonstrates how increased pension contributions can affect retirement income, and an all-of-market annuity search solution for securing the best deals.
It also gives access to personalised retirement recommendations with an easy to follow ‘advice journey’ which ends with a video call with a FCA regulated financial adviser.
Butler adds: “Small changes today can lead to a much more comfortable retirement tomorrow. With trusted advice and intuitive tools, savers as well as those close to retirement can take meaningful steps toward securing their financial future.”
For more information visit: www.pensionpotential.co.uk.