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Pension freedoms blind spot putting 1.7m retirees at risk of a ‘later-life financial crisis’

Swindon, May 29, 2018

  • Four in five (79%) retirees drawing down their pension pot have not yet set up a Lasting Power of Attorney
  • Without the vital legal document, families could be locked out of a loved one’s finances should they become too ill to manage their affairs, leaving them facing a lengthy court process before they can step-in to help
  • More than 1.7million retirees could be affected by 2025 at a time when the Alzheimer’s Society estimates more than a million Britons will be living with dementia

Four in five retirees (79%) using the new pension freedoms to manage their retirement savings face a potential ‘later-life financial crisis’ as they have not yet set up a Lasting Power of Attorney (LPA), a report from Zurich warns.

More than 345,000 retirees using income drawdown to fund their retirement have not yet given a family member or friend the legal authority to make decisions on their behalf if they no longer can. The financial planning blind spot could prevent an individual trusted by the retiree from immediately stepping in to help them manage their affairs should they suddenly fall ill or lose mental capacity. Without an LPA in place, even next-of-kin would be forced to apply to the Courts to take charge of a relative’s finances.

The findings highlight the scale of an issue which has emerged since the Government scrapped rules compelling people to buy an annuity at retirement. Twice as many people are now choosing drawdown over annuities, giving them the responsibility of managing their income in retirement.  If the gap continues to grow at the current rate, Zurich estimates it could leave 1.7 million retirees at risk by 2025. 

Alistair Wilson, a savings expert at Zurich, 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.”


According to the Alzheimer’s Society, there are currently 850,000 people in the UK living with dementia.  This could increase to over one million by 2025, and potentially double to two million by 2051. However, Zurich found just one in five (21%) people who have moved into drawdown since the pension reforms have registered an LPA. 

The study found that people with a financial adviser were almost four times more likely to have an LPA than those who had not sought advice (66% vs 17%).

Harriet Hill, Programme Partnerships Officer at Alzheimer’s Society said, An LPA can be a very important part of advance planning for a time when a person will not be able to make certain decisions for themselves. It allows the person to choose someone they trust to make those decisions in their best interests. This can be re-assuring and making an LPA can start discussions with family or others about what the person wants to happen in the future. We need to get to the stage where a LPA is taken out as a standard practice, with financial services advising people to do this as early as possible.

“The stigma around the LPA, as with dementia, is compounded by its links to mental capacity. People are reluctant to consider a future where they may not be able to make their own decisions due to the connotations they associate with this. In cases where LPAs are not in place, assets and equity may be lost, or those in a vulnerable position may be forced to make decisions they are no longer able to make”.

The Drawdown: Is it working for consumers? report from Zurich is the first and largest study of its kind, exploring the impact of drawdown on almost 750 people since the pension freedoms.

To help, Zurich has also published a new consumer guide on how to set up a LPA, which can be found at



Notes to editors

* The study is based on a YouGov survey of a UK sample of 742 people who have moved into drawdown since the pension freedoms were introduced in April 2015.  The survey was carried out between 14th December 2017 and 24th January 2018.

** FCA Data Bulletin (issue 12) shows 345,265 pots moved into income drawdown between October 2015 and October 2017.   Assuming the number of people moving into drawdown continued at a similar rate from November 2017 to April 2018, this would equate to a further 86,316 people in drawdown.  345,265 + 86,316 / 5 x 4 = 345,265 people

*** 345,265 / 2 years of drawdown data = 172,632 x 10 years = 1,726,325 people

What is flexi-access drawdown?  Introduced under the pension freedoms, flexi-access drawdown is a way of taking money out of a defined contribution pension to live on in retirement.  It allows people to keep their pension invested in the stock market and withdraw a taxable income at any time.

What is an LPA?

A Lasting Power of Attorney gives another adult the legal authority to handle decisions on your behalf if you become unable to make them yourself.  They can manage your finances or make decisions relating to your health and welfare

How do I set up an LPA?

There are two different types of LPA – health and welfare and property and financial affairs - each requiring separate forms.  When you have completed an LPA, you should register it by sending it to the Office of the Public Guardian (for England and Wales), which can take up to 10 weeks.  In most cases, it costs £82 to register each LPA. You can make changes to your lasting power of attorney (LPA) even if it’s been registered, or cancel it, as long as you still have mental capacity to make decisions.  Charges and processes are different for people living in Scotland and Northern Ireland.


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About Zurich

Zurich in the UK

Zurich provides a suite of general insurance and life insurance products to retail and corporate customers.

The UK General Insurance division supplies personal, commercial and local authority insurance through a variety of distribution channels. Specialist student and young professional insurance provider Endsleigh has been wholly-owned by Zurich since 2007 and remains the only insurance brand recommended by NUS. Endsleigh offers a range of motor, home, travel and gadget cover and more information can be found here.

Zurich’s UK Life business* offers a range of personal protection, pensions and investment policies available through financial intermediaries. UK life also provides protection policies for the corporate market available through employee benefit consultants.

Based at over 20 locations all across the UK - with large sites in Birmingham, Cardiff, Cheltenham, Farnborough, Glasgow, London, Swindon and Whiteley - Zurich employs approximately 7,000 people in the UK.

Corporate Responsibility is an integral part of how Zurich does business, understanding the need to set and maintain high standards of integrity towards customers, employees, local communities and the environment. Zurich is a member of 'Business in the Community' and was also one of the first recipients of the Business in the Community's ‘Community Mark’. This award is the UK's only national standard that publicly recognises best practice in community investment which, in Zurich's case, is mainly delivered by the Zurich Community Trust, the charitable arm of Zurich in the UK. The Zurich Group takes part in the Dow Jones Sustainability Index and is a signatory to the United Nations Global Compact.   


Zurich Globally

Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With more than 53,000 employees, it provides a wide range of general insurance and life insurance products and services. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, including multinational corporations, in more than 170 countries. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at

*Zurich’s UK Life business is operated primarily through two entities: Zurich Assurance Ltd and Sterling ISA Managers Limited. Zurich Assurance Ltd is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Sterling ISA Managers Limited is authorised and regulated by the Financial Conduct Authority.