The intentions of pension-aged savers around the pension freedoms have not resulted in them taking these actions after the reforms came into effect, according to research by pensions firm Avacade Future Solutions.
Its research, which surveyed 2,003 pension holders aged 55 and over in April 2015, followed by a subsequent 503 of these respondents in June 2015, found after learning about the pension freedoms, 60% of those eligible for tax-free withdrawal planned to take a cash lump sum. However, 73% of this group have not done so.
The research also found that:
- While 21% of respondents intended to transfer a portion of their money into a savings account, only 3% have done so.
- 13% initially said they would use the money to go on holiday or invest it (excluding property), but just 2% have followed through with this so far.
- Less than one in ten (9%) of respondents eligible for cash withdrawal have made use of the new pension freedoms.
- In April, 9% planned to invest in property or use the money to pay off their mortgage. Only 1% had done so by June.
- 18% of those about to retire are yet to decide what course of action to take.
Lee Lummis, chief executive officer of Avacade, said: “The disparity that stands between pensioner intentions versus their actual actions is shocking, and the reason behind this is something we encounter on a daily basis.
“The difference from 60% planning on taking out a cash lump sum to just 9% doing so highlights that the effect of the reforms is being hindered because many pension planners are confused by the changes and cannot decide the best route to achieve their pension objectives.
“The findings of the research highlight a public that requires strategic support to navigate the pension deficit the majority are heading towards.”