![\"Lamborghini\"](\"http:\/\/newclone.retiremove.co.uk\/blog\/wp-content\/uploads\/2015\/03\/Lamborghini.jpg\")
<\/a><\/p>\nThere are also risks that people will do nothing in the face of complexity, putting money in high-risk investments, or taking out their money and putting it in a low interest bank account.<\/p>\n
However the ILC-UK report, sponsored by Aviva, found the much-criticised annuity system offers people the most financial security.<\/p>\n
Andrew Tully, pensions technical director at MGM Advantage, said: \u201cIt\u2019s well known that people are not saving anywhere near enough for their retirement, and this is coupled with improving life expectancy, meaning many people will have to face up to some tough decisions in the future.<\/p>\n
\u201cThere is no easy answer, but people must realise their retirement could easily last 20 years or more. With the unprecedented flexibility being introduced around pensions in April, the choices have become far more complex.<\/p>\n
\u201cThat said, annuities will continue to offer the security and peace of mind from a guaranteed lifetime income.\u201d<\/p>\n
Even if savers do decide to buy an annuity, which have been attacked for offering very poor value for money over the past few years, 1.1 million have not saved enough to get a decent income unless they receive additional pensioner benefits or have assets like property or other savings.<\/p>\n
The report – Here Today, Gone Tomorrow – used data from the English Longitudinal Study of Ageing and found that people are underestimating their life expectancy by upwards of four years.<\/p>\n
If they decide to take their pension pot in one lump sum and live off it, there is a “real possibility” they will run out of money, the study found. Report author and ILC-UK senior research fellow Ben Franklin said: “Annuities are generally misunderstood and the group who stand to lose the most from spending everything too early, also score relatively poorly on financial capability, making them particularly susceptible to poor decision making.<\/p>\n
“Without the appropriate support including a new default strategy, these individuals could end up significantly worse off in retirement.”<\/p>\n
However pension expert Alan Higham, of Fidelity Investments, said the report did not examine another option available to pensioners. \u201cAn annuity does ensure that you can’t run out of money but it comes at a hefty cost,\u201d he said.<\/p>\n
\u201cUsing your private pension to defer taking your State pension for as long as you can gives a much higher secure income than buying an annuity so it is wrong to say the annuity is the only route.”<\/p>\n
*Pension savers have been urged to \u2018scamproof\u2019 their savings by The Pensions Regulator ahead of next month\u2019s changes. The Regulator has refreshed its “scorpion” campaign to alert retirement savers and pension scheme trustees to the risks of people being tricked by out of their money by cold calls and texts promising a “free pension review” or mentioning a “legal loophole”.<\/p>\n