Cochran says that people accessing their pension sooner may not necessarily risk poorer financial futures, because it depends on a range of things: "It's a question of timing, what age they are at the time of accessing their cash, what other savings they will have when they retire, and when they plan to stop working.
"For many, it will be best to remain invested, while some may face more immediate financial priorities and so accessing their funds sooner rather than later could be best for their individual situation."
Some clients may have only wanted to dip into their pension pots temporarily for those "immediate" priorities; for example, some advisers have told FTAdviser of clients who have spent liberally on helping their children and grandchildren through the pandemic.
For example, one couple took a sum out to buy a car for their daughter, who is an NHS worker, so that she did not have to travel on public transport and put herself at even more risk. Hardly profligate spending, and again not a worrying sign of mass Lamborghini-buying.
In these and other cases, people may want to start putting money back into the pot where they can, and will need advice on how to do so.
Yuille says: "Investing your money wisely can pay dividends in the long run, so we urge people to continue and/or restart saving into their pension again whenever possible."
Like Cameron, Yuille wants the MPAA to be scrapped, although the ABI thinks this should be replaced with recycling rules, and urges people to seek professional advice.
The IFS's Chan comments: "Some clients, once they are in a better financial position, will want to know what actions they can take to steer their financial plan back on track."
He outlines the main ‘levers’ in their financial plan as the following:
- Pay more into their pensions or retirement vehicles.
- Delay retirement by some years.
- Reduce their income need in retirement.
- Review their pension funds to ensure they are performing to standard and/or increase the risk they are taking.
However, Chan strongly advises people exercise caution and get proper advice if they are considering pulling the fourth lever in this outline.
At any rate, it appears advised clients have been taking money sensibly, rather than indiscriminately, from their pots and alarm need not be sounded – at least, not yet.
simoney.kyriakou@ft.com
