A quarter (25 per cent) of people aged between 55 and 64 are not aware of pension freedoms, according to research from Fidelity International.

The firm highlighted the findings as especially concerning due to the Office for National Statistics reporting that over a quarter of furloughed workers were aged 50 and over, and that three in 10 older workers currently furloughed thought there was a 50 per cent chance or higher that they stand to lose their job when the scheme ends.

However, two-fifths (41 per cent) of those aged 55-64 who were aware of pension freedoms were found to believe that the decision to raise the age limit for taking pension income from 55 to 57 in 2028 was a good idea, which Fidelity said demonstrated understanding of the potential consequences of taking your pension too early and the benefits of giving investments time to grow.

Fidelity International investment director for workplace investing, Maike Currie, said: “The past year has been tough on household finances, and many employers are looking at how they can support their employees’ wellbeing not just today but for the future as well.

“The reality is that during the pandemic, many people may have had to reduce their work hours, their savings or the amount they put into their pensions, which will all have a serious knock-on effect now we are coming out of lockdown. As a result, those over fifty-five may be looking to pension freedoms as a safety net.”

Fidelity added that a lack of awareness of reforms such as the freedoms meant some might be unaware of the considerations associated with deciding to access a pension early, such as making sure they have enough income to last throughout retirement.

As such, the company called for greater education and engagement when it comes to pensions and retirement planning.

Currie continued: “While the advent of pension freedoms has provided flexibility for many and given retirees more control over their later-life savings; it has also increased the chances of those who don’t fully grasp the considerations of drawdown running out of income during retirement. Both the benefits and these risks are something that employers should be aware of.”

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