Bad financial decisions now will haunt pension savers for the rest of their lives, the ABI has warned consumers.

The financial services trade body has urged pension savers to get authorised financial advice before making any decision about a pension.

The body is concerned that many people will use the Pension Freedoms to take cash early from their pensions.

The Association of British Insurers said today: “With lockdown causing financial worries for many families, the ABI is warning people not to see their pensions as a quick way of raising cash, and to think twice before making any rash financial decisions during this uncertain time.”

The body is particularly concerned about over 55s using the Pensions Freedoms to take cash now “without thinking through the longer term consequences, or falling prey to pension scammers out to rob savers of their pensions.”

An Aegon study out this week found that 55-64-year-olds were the most anxiouis about their personal finances and the impact of Coronavirus.

Recent ABI research highlighted that, even before Covid-19, if the average amount that was being withdrawn from pension pots continued, many people risked running out of money in their retirement.

It points out that a man aged 55 can expect to live, on average, for a further 24 years and a woman at the same age can expect to live, on average, for a further 27 years.  

The ABI says savers should:

• Think twice before taking money out of a pension. Other sources of income, such as cash savings, should be used instead.

• Get authorised financial advice or guidance before making any decision. This could include Pensions Wise (part of MAPS) or paying to see a Financial Planner or other regulated adviser.

• Remember that pensions savers close to retirement and in a workplace pension will, in most cases, have had their pension moved into less risky assets than shares.

• Beware of scammers and do not respond to unsolicited phone calls, texts or online offers of pension reviews.  It urges pension savers thinking about changing pension arrangements to check the FCA Register or call their helpline 0800 111 6768.

Yvonne Braun, ABI’s director of policy, long-term savings and protection, said in a message to consumers: “Lockdown will not last forever, but the decisions you make today about your pension could impact on your standard of living for years to come. Now, more than ever, it is important to think longer term, consider your options, and seek advice and guidance - whether from the Money and Pensions Service or a financial adviser – before making any decisions.

“And don’t fall victim to scammers – shun any unexpected approaches; and remember: if a deal seems too good to be true, it almost always is.”

• Information from the ABI about pensions and insurance during the Covid-19 is available here:    https://www.abi.org.uk/products-and-issues/topics-and-issues/coronavirus-hub/