Pensions - Articles - 55% of over 55s undecided how to take pension income

 There is still indecision amongst the over 55s on how to make the most of these reforms with over half (55%) undecided on what to do with their savings, and a further quarter (27%) of those who won’t access their pot in the next month waiting to see which new products will be available. Of those with a pension pot, a quarter (23%) want to take a tax free cash lump sum, one in ten (12%) plan to use drawdown and similarly one in ten (12%) are planning to take out an annuity. Only one in ten (9%) plan to take their entire pension as a cash lump sum, easing fears that many pensioners could spend their entire savings in the first few years of retirement

  

 The indecision over the new choices, demonstrates most retirees will want help navigating the new retirement income landscape and Pension Wise, the government’s impartial guidance service is set to be the most popular choice with one in five (20%) over 55s with a pension pot already saying that they plan to use it after being told what it is. 15% are planning to speak to a financial adviser with a further 15% saying they will seek advice and information online.

 Nearly one tenth of over 55s with a pension pot are planning to take a mix of two or more different financial products for their retirement. This might include using some of the savings to fund an annuity to provide a level of guaranteed income, and using a drawdown product to add flexibility.

  

 One in three people over 55s have no private pension savings but of those that do the average savings is £59,000, rising to £65,500 for men and decreasing to £47,100 for women. When planning how to use these savings in retirement, a fifth (18%) plan to spend their money on travelling, whilst one in ten (12%) expect to use the cash for everyday expenses and similarly one in ten (12%) will use the money to pay debts and bills.

  

 John Perks, Managing Director of LV= Retirement Solutions, said:

 “In just a few weeks, those approaching retirement will have more choice as to how they use their pension fund. We believe these changes present a great opportunity to change the retirement landscape for the better, giving customers more choice and control over how they manage their retirement income, and we believe the Government has taken a bold and positive step here.

  

 “We support any initiative that encourages consumers to shop around to get the best value and Pension Wise will play an important role in informing people about the new freedoms and the ways they can fund their retirement. There is also an important role for regulated advice to ensure those approaching retirement make the most of the savings they have spent a lifetime building. As well as accessing Pensions Wise we’d urge people to speak to a financial adviser to ensure they get the right financial solution for their retirement.

 “The research shows many people over 55 remain undecided about how to take their pension income and are waiting for new products to become available, so we have created a proposition that will help financial advisers clearly explain the pension changes and the opportunities that they present retirees, and make it quick and easy for advisers to purchase the right solutions on their behalf.

  

 “Prior to the 2014 Budget we were already seeing advisers blending solutions in order to achieve a level of income flexibility and a guaranteed element for retirees. We believe that these new pension freedoms will result in even greater demand as more retirees seek to combine solutions to achieve a tailored income option for their retirement. Retirement has evolved and we think that our proposition, which builds on the breadth of our product suite, will help meet the income needs of today’s retirees.”