Zurich, which carried out the survey to coincide with Dementia Action Week, said the gap reveals a “Financial Planning blindspot” which could leave tens of thousands of pensioners financially vulnerable.
Based on the latest FCA data, Zurich estimates that as many as 615,000 people have switched their savings into drawdown since the Pension Freedoms arrived in 2015 and it says these assets need to be covered by an LPA.
Four in five of all Britons have not registered an LPA, with women (82%) marginally less likely to have a set one up than men (78%). Among over-55s, seven in 10 (73%) do not have an LPA, rising to more than four in five (82%) 45-54 year olds.
According to the Alzheimer’s Society, there are currently 850,000 people in the UK living with dementia. This could increase to over 1m by 2025 and by 2051 to 2m.
Zurich’s concern is that many of pension savers in drawdown, some without an adviser, are taking major risks without an LPA in place in the event their physical or mental health deteriorated and they were unable to manage their investments.
A lengthy court process could be the only way to resolve investment management issues for friends and family in the event of poor health, says Zurich.
Alistair Wilson, Zurich’s head of retail platform strategy, said: “Registering a Lasting Power of Attorney has become even more crucial since the pension reforms.
“Despite this, a vast number of retirees are unprepared for a time when managing their pension might become hard, or even impossible. This problem is creating a potential time bomb as the population in drawdown expands and ages.”
Morven Lean, programme partnerships officer at the Alzheimer’s Society, said: “There is still a stigma surrounding LPAs, where people can be reluctant to consider a time when they are not able to make their own decisions. Not having an LPA or deputy can – in worse case scenarios – lead to situations where assets and equity may be lost and those in a vulnerable position are forced to make decisions they are not capable of making.”
YouGov surveyed 2012 adults online on behalf of Zurich this month. The figures have been weighted to be representative of all adults aged 18+.