Pension blind spots risk leaving savers short at retirement

• Over a third of workers over-50 don’t know what to do about pension savings 
• 64% of retirees cash out tax-free lump sum age 55 
• One in five (19%) over-50s will only seek advice in year they retire.

More than a third (34%) of workers over 50 have not yet decided on how they will access their pension savings as they approach retirement, according to Scottish Widows’ latest Retirement Report.  

While 46% of those still working expect to take their tax-free cash as soon as they can, in reality 64% did this. This gap shows how priorities can change as retirement moves from a future plan to something more immediate.  

Before retirement, 27% of workers expect to keep most of their pension invested and take a regular income, while 20% plan to buy an annuity. However, 28% of retirees choose an annuity, highlighting the appeal of a guaranteed income for life.

A critical decision point

Reaching the milestone age of 55^* - when most savers can begin accessing their pension - opens the door to a range of complex decisions about how to take their money, understand how much tax they may have to pay and create an income that will last throughout retirement. 

The research shows that four in 10 (41%) over-50s who are still working have little or no understanding of the different ways they can access their pension savings in retirement. Only a quarter (25%) feel confident they know all the main options available to them. 

The gap is even more pronounced among women. Nearly half (46%) of women over 50 who have not yet retired say they have little or no knowledge of their retirement options, compared with just over a third (35%) of men.

Leaving it too late

The good news is that most people recognise the value of advice and guidance. More than four in five (81%) over-50s agree it is important to seek support before accessing their pension. 

The challenge is timing. Almost a fifth (19%) plan to seek advice only in the year they retire, leaving limited time to consider their options and put a plan in place. A further 15% do not know when they will seek help, while just 8% do not expect to seek advice or guidance at all. 

Leaving decisions until the last minute increases the risk of unintended consequences, from larger-than-expected tax bills to lower income later in retirement.

Technology can help close the gap

As the industry looks for ways to engage people earlier and make retirement planning simpler, technology has an important role to play. 

Insight from Scottish Widows shows that people are open to new forms of support, with 42% saying they would use AI tools to help explain complex pension terminology and translate industry jargon into plain English. 

By making retirement choices easier to understand and encouraging earlier engagement, technology has the potential to help more people make informed decisions and achieve better outcomes in later life. 

Carolyn Jones, Retirement Director, Scottish Widows, said: “Turning 55 opens the door to pension savings built up over a lifetime, but while access to that money brings opportunity, it also brings important decisions that can shape retirement for decades to come. 

“That's why we need to bring the conversation forward. Too many people only fully engage in their retirement planning when they approach the point of taking action. By then, valuable opportunities to plan, prepare and make informed choices may already have been missed. 

“The industry is making progress. Targeted support, guided retirement journeys, digital advice and workplace education are all helping people navigate increasingly complex decisions. But we need to go further. 

“Our rallying cry is simple - engage earlier, understand your options and seek advice sooner. As an industry, we have a shared responsibility to give people the knowledge and support they need. For example, Scottish Widows’ app helps customers get a better understanding of what they have in terms of pension savings, track lost pots and decide what to do with them in three simple steps. The earlier people think about their income needs, the more choices and confidence they have to achieve the lifestyle they want.” 

Financial planning tools available from Scottish Widows include a Retirement Calculator, which lets people see if they are on track for their chosen retirement lifestyle.

Download full press release (PDF, 136KB)
 

Notes 

Methodology 

The research was conducted online by YouGov across a total 6,224 adults aged 18+, weighted to be representative of the UK population, and including a boost of 1,000 adults aged 18+ to better understand the retirement prospects of minority ethnic groups, also weighted to be representative of the UK minority ethnic population aged 18+. Fieldwork was carried out between 16 February 2026 and 24 February 2026.  

^*Increasing Normal Minimum Pension Age

About Scottish Widows  

Founded in 1815, Scottish Widows is part of Lloyds Banking Group, the UK’s largest digital bank and financial services group. With £303bn in total assets under administration and more than 6.5 million customers, Scottish Widows’ award-winning product range includes workplace and individual pensions, annuities, life cover, critical illness and income protection, as well as savings and investment products.

Scottish Widows has more than 1.75m digitally registered customers. The Scottish Widows Platform is trusted by financial advisers as the home for the pension and investment assets of more than 170k clients.