It’s nearly six years since the introduction of Pension Freedoms, which were intended to give savers greater choice and control over their Defined Contribution retirement funding. But a new report issues a stark warning that up to three quarters of savers are at risk of running out of funds during their retirement years – and having to fall back on the State Pension.

New Choices, Big Decisions has been jointly published by workplace pension provider The People’s Pension and asset manager State Street Global Advisors, and is based on research conducted by the consultancy Ignition House

Another key finding of the report is that people facing retirement want their pension provider to give them a safe guided path into retirement, rather than the complex array of decisions with which they are now faced.

Among the key findings are:

• Savers are scared of planning for the future as they don’t want to discover the “truth”.
• They underestimate the financial risk of growing old and don’t understand how inflation can impact their savings.
• The typical saver follows the path of the least resistance – they won’t leave a product or change a drawdown withdrawal rate once they have signed up.

Phil Brown, Director of Policy and External Affairs at B&CE, the provider of the People’s Pension said: “This research shows why policy makers must require pension schemes to guide members to products which match retirement risks, including living longer than they had planned for, and which will ensure that DC pension savers have an income throughout their retirement.

“There is evidence that a significant number of people are sleepwalking into retirement and will have a worse quality of life in later years than could have been the case if they had been guided.

Alistair Byrne, of State Street Global Advisors said: “This research shows clearly the very many challenges that older savers face when making a decision about their pensions. People struggle to see beyond the near-term future and cannot always access the type of advice and support they would like.

“As an industry we need to continue simplifying what we offer, providing guidance and support, and easy paths to follow, whether we call them ‘defaults’ or not.”

Baroness Helen Morrissey, pension specialist at Royal London, said: “The pension flexibilities have given people unprecedented freedom in how they use their pensions. However, this research shows there are key things people must understand – namely they could live longer than they expect and they need to do all they can to ensure their money lasts with them.”

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