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Less than half likely to use guidance service

Retirement income specialist MGM Advantage has commissioned new research which reveals that most people who are approaching retirement are yet to be convinced about the forthcoming retirement guidance service.

Those nearing retirement were asked about using the service, due to launch next year, and more than two-fifths (42%) stated they would either definitely or probably use it.

However, more than a quarter (27%) said that they definitely or probably would not use it, and 31% are not sure whether they will or not.

MGM Advantage Pensions Technical Director Andrew Tully warned that the industry would need to work hard to encourage people to utilise the guidance service, once it is launched.

Tully explained that getting the best value from savings meant overcoming inertia, adding that the new service would need careful marketing to make it effective.

Traditionally, around half of retirees rolled their savings over into an annuity with their holding provider, but this may well change since the reforms announced in the Budget.

Tully said that the market would not be working properly if a similar practice continues (whether with annuities or drawdown, or other options available to those entering retirement), making access to guidance and advice critical to the success of the new service.

New ways needed to be thought of to engage and encourage people to use the guidance service, Tully continued, after which they may go on to seek professional financial advice.

He warned that unless people took advantage of the new service then, despite the increased flexibility and freedom now on offer regarding pension savings, people may end up with poor outcomes.

The Pensions Advisory Service Chief Executive Michelle Cracknell described the research as a good reminder that the industry would have to work hard to demonstrate to people the advantage of taking guidance.

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