Charity warns pension pot raiders failing to plan for future care costs
More than half of people who have taken money out under pension freedoms have not planned for future care costs, a new study shows.
A survey of 500 people who have accessed their pension since April of last year revealed that just one in six has budgeted for the cost of care as they grow older.
Citizens Advice said its research found that three out of five have not thought about how they will pay for care costs, with one in 10 hoping to rely on their family or the Government.
Local authorities should offer online or face-to-face services to help people plan for the future, said the report.
Gillian Guy, chief executive of Citizens Advice, said: “Care costs can be a heavy financial burden that many people are unprepared for.
“It is unsurprising that many people in their fifties are not thinking about how they will pay for care costs when the need for this could be 10, 20 or even 30 years away. But this issue does need some attention, otherwise people risk dipping into their pension now only to find they need some of the money later.
“Getting the right guidance is key in helping people think about and plan how they will fund their retirement, including costs which are more tricky to consider, such as care fees.
“There is also an opportunity for local authorities to help people plan ahead for future care costs, by providing clear information about how funding for care works and how much it costs.”
A Treasury spokesman said: “It is only right that people have real freedom and choice over how they access their hard-earned retirement savings and our pension freedoms are proving to be a great success.
“To help people make informed decisions, including on the costs of care in retirement, the Government set up the free and impartial Pension Wise guidance service which over 2.8 million people have accessed since April 2015.”
Debbie Abrahams, shadow work and pensions secretary, said: “The Government has failed to ensure workers understand the hidden costs of pension schemes, and have independent, good quality advice available to help them make informed decisions about their retirement needs which may include the cost of being cared for.
“There is a real risk their complacency will lead to our next pension crisis when people who have taken too much out of their pension pot, or have been subjected to multiple hidden charges, find themselves short of money and unable to afford the care they need in their retirement.”
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