A new report suggests that four-fifths of retirees who are taking advantage of pension freedoms may face a ‘later-life financial crisis’.
According to a report from Zurich, the risk – estimated to affect 345,000 retirees – stems from their lack of having a Lasting Power of Attorney (LPA), potentially hindering them from obtaining financial help should they become ill or lose mental capacity. Without providing a family member or trusted friend with the legal authority to make this kind of decision, the Courts would have to become involved should the individual no longer be able to make decisions themselves.
Commenting on the findings of the report was Alistair Wilson. The savings expert at Zurich highlighted the important purpose which LPA’s serve in later life decision making, particularly since the pension freedoms were introduced.
He said: “Registering an LPA has become even more important since the pension reforms. Thousands of people are now making complex decisions on their pension into old age, when the risk of developing a sudden illness or condition such as dementia increases. Despite this, many are unprepared for a sudden health shock or a decline in their mental abilities. The time to set up an LPA is well before you need it, and pension providers should be highlighting this to their customers.
“With more and more people moving into drawdown, this is creating a ticking time bomb that could leave thousands of people facing a potential later-life financial crisis. It is vital that people plan for a time when managing their pension might become hard, or even impossible, and speaking to a financial adviser is one of the best ways to do this.”
