Recently the Work and Pensions Select Committee carried out an inquiry looking at whether there are risks associated with pension freedoms and there were suggestions that they may recommend the government imposes new restrictions.
However, the pension freedoms have proved hugely popular and 72% of people believe the freedoms help people transition into retirement, supplementing income from their pension with part time work. Just one in four (25%) people said they would be in favour of increasing the age at which they could access their pension beyond 55, although most expect to wait till at least age 60.
80% of people said they wanted choice over where to invest their pension when moving into flexi access drawdown, although 63% said they were open to a default investment option for those who made no active decision.
Controversially, when asked if the Government should restrict the pension freedoms where people can’t show they have enough other secure income, including any state pension, to cover their essential costs in retirement, responses were split with equal numbers agreeing and disagreeing.
One area where people were supportive of restrictions was in making sure people get support. Two thirds said they would consider seeking advice to make decisions about their retirement income and 3 in 5 (61%) thought it would be a good idea to require those who had not taken advice to seek guidance from Pension Wise
Steven Cameron, Pensions Director at Aegon said: “As the third anniversary of the pension freedoms approaches there has been talk in some circles of restricting access. This has largely been prompted by concerns that people may run out of money in retirement by overspending or invest unwisely and lose their savings. However, the consensus amongst those we spoke to is that the freedoms should remain broadly unchanged. They’re seen as hugely helpful as a means of gradually moving out of the workforce by enabling people to start drawing an income that they can supplement with part time work. We agree that the pension freedoms introduce some risk, and we’re encouraged that two thirds of people would consider seeking advice. But any attempt to restrict the freedoms for those without an alternative source of secure income in retirement would be politically risky with our research showing such a move would divide the nation.“
• Work and Pensions Select Committee rumoured to be mulling restrictions to pension freedoms as third anniversary approaches
• Just one in four people in favour of raising minimum access age from 55 as freedoms seen as enabling transition into retirement
• Any attempt to remove freedoms for those without other secure retirement income would prove hugely unpopular
• 80% favour investment choice over a default option when moving into flexible drawdown
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