• New HMRC figures show that the pension freedoms payments have more than doubled from Q1 to Q2 2016
• Aviva insight, however, shows the need for vigilance to ensure that customer’s assets – savings and property – are sufficient to meet expectations
Today’s figures from HMRC* show that usage of the new pension freedoms, introduced in April 2015, have hit an all-time high. In Q2 2016, £1,770m was paid out, more than doubling the figure from Q1 2016 (£820m). The number of individuals taking advantage of the new freedoms has also more than doubled, from 74,000 in Q1 2016 to 159,000 in Q2.
While supportive of the pension freedoms, new research from Aviva highlights the need for vigilance, to ensure the long-term interests of savers are protected.
Aviva’s latest Real Retirement Repor identifies that older people continue to see a pension as the best means of saving for their retirement. Awareness of the new freedoms is riding high at 88% among those who have passed the qualifying age of 55. However, two million of the thirteen million over-45 households who own their own home expect a need to borrow in retirement to support their lifestyle, so money is tight for many. Accelerated use of the Freedoms could exacerbate this need to borrow.
There is also strong evidence to say that people want to use their homes to support later life. Six million want to use their home to provide income in retirement, perhaps by downsizing or through equity release; seven million want to use it to pay for long-term care; and eight million want to use their home to provide an inheritance for the next generation. Combined, that’s 21 million demands on just 13 million households.
These insights raise the question: is there enough saving and home to go around?
Commenting on the new HMRC figures, Alistair McQueen, Savings & Retirement Manager at Aviva said: “Aviva supports the new pension freedoms - we believe savers should be trusted with their own money. The new HMRC figures demonstrate a significant spike in their popularity. Aviva’s own insight shows the need for careful vigilance. The long-term interests of all savers must be protected.
“Money is tight for many, and the demands on our finite resources – savings and property – are great. Freedom, choice and popularity is to be celebrated, but savers must be supported to ensure their enthusiasm today does not damage their ambitions for tomorrow.
“Aviva will continue to support its customers as they save for, enter into and progress through retirement; we will continue to encourage our customers to ensure they have enough saving and property to go around; and we will continue to work with all concerned to ensure our saving and pensions market works for the benefit of all customers, today and tomorrow.”
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