02 Jul 2019
Around 70% of UK pensioners have not set up a power of attorney.
Insurer Zurich says this is a financial planning blind spot, which could leave tens of thousands of pensioners financially vulnerable in retirement.
Four years ago, an overhaul of pension rules gave people the freedom to keep their pensions invested in retirement and draw an income as and when they like.
Zurich estimates as many as 615,000 people have since switched their savings into drawdown.
The insurer adds that DIY investors managing drawdown without the help of a financial adviser need to make decisions on where to invest and how much to withdraw, at a time when their physical or mental health might be deteriorating.
But, without a power of attorney (POA) in place, their families or friends would be unable to quickly step in to help them without facing a lengthy court process.
Alistair Wilson, Zurich's head of retail platform strategy, said, "Registering a power of attorney has become even more crucial since the pension reforms.
"Hundreds of thousands of people are now making complex decisions about their pension into old age, when the risk of developing illnesses, such as dementia, increases.
"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. Getting financial advice can help you to make the most of you savings, and ensure you have the right plans in place for all stages of your retirement."
The Law Society of Scotland explains that a POA is a way of giving someone else permission to make decisions about your money and property, as well as your health and personal welfare. It usually sets out what you would want to happen in the future if you could no longer look after your own affairs.
The society adds that no-one has the right to act on your behalf without your legal authority if a POA is not in place. That means your family or friends may have to go to court to get permission to make decisions for you.
A POA is a written document which gives the name of the person - the attorney - you would like to help make decisions and take actions on your behalf.
The attorney, or attorneys, should be someone you trust, such as a family member or friend or your solicitor.
There are two main types of POA in Scotland - a continuing POA covers decisions about your money and property, while a welfare POA relates to your future health or personal welfare.
If you would like to speak to someone about your circumstances, Aberdein Considine have specialist lawyers who can guide you in the right direction and help you set up powers of attorney.
Call us on: 0333 0044 333 or click here to speak to someone within our private client department.