More than half (51 per cent) of people aged over 55 say that they “know little” about pension freedoms, according to research by Standard Life.

A further 10 per cent said that they had never even heard of the rules, which were introduced in 2015, while 34 per cent remember the changes occurring.

Despite the apparent lack of knowledge, Standard Life found that 55 per cent of adults in the UK plan to take tax-free lump sums from their pension before they retire.

According to the survey, men were more likely to know about pension freedoms, with 43 per cent saying that they knew little about the rules compared to 58 per cent of women.

Awareness of pension freedoms was higher amongst over-55s receiving financial advice, with 62 per cent saying they had ‘detailed knowledge’ of the rules, compared to 33 per cent that have never received financial advice.

“Pension freedoms put a greater onus on people to keep themselves informed of their options when it comes to accessing their pension money,” commented Standard Life head of platform proposition, Alastair Black.

“However, five years on there is still a lack of awareness. Little knowledge and understanding of the rules mean people risk making decisions that are not best for them.”

The research found that 35 per cent of Brits aged between 55 and 64 have already accessed their pension pot, while 35 per cent of those between 45 and 54 said that they would ‘probably’ or ‘definitely’ take a tax-free lump sum from their pension.

Furthermore, 15 per cent of respondents aged between 45 and 54 said they were likely to take a taxable lump sum in retirement.

However, only 28 per cent of those aged over 45 who are yet to retire were looking to pay for any form of financial advice as they approach retirement.

“In the current climate, we know many advisers are hearing from clients keen to dip into their pension savings as soon as they can,” continued Black.

“Pension freedom rules mean those aged 55 and over are able to do this, but they may not realise that taking from their pension now risks locking in losses of the current stock market falls.

“Those with a financial adviser are more likely to understand the pitfalls of taking a tax-free lump sum from their pension pot, which is why our research showing so many people nearing retirement are not planning to take any form of advice is concerning.”

Standard Life polled 2,825 UK adults via an online survey in February and March 2020.

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