Just 6% of respondents are planning to take their entire pension pot as a cash lump sum at retirement once the new pension reforms come into force next year, according to research by Fidelity Worldwide Investment.
Its Class of 2015 report, which surveyed 500 employees planning to retire between April 2015 and March 2016, found that more than half (54%) also plan to take some of their pension pot as a cash lump sum.
More than a third (37%) of these retirees plan to take only the 25% tax-free portion available to them from April 2015.
The research found that annuities still have a place in the post-Budget retirement landscape, with 16% of respondents still planning to solely buy an annuity.
Nearly a quarter (23%) of respondents plan to transfer their pension pot into a drawdown pension, while 18% plan to use a combination of a drawdown pension and an annuity.
A further 16% of respondents plan to leave their pension invested for growth and defer taking it.
However, the research found that only 17% of respondents have a clear plan in place and researched their retirement income options.
One in seven (15%) of respondents are reviewing their existing retirement plan as a result of the Budget changes, and more than a quarter (26%) are waiting to see what happens after the new pension rules come into force before making a plan.
The research also found:
- 75% will look to use at least one source of advice to inform their decisions.
- 35% will seek the help of an independent financial adviser.
- 21% will turn to friends and family for advice.
- 20% will go to their pension provider for guidance.
Alan Higham, retirement director at Fidelity Worldwide Investment, said: “With greater freedom, comes greater responsibility. We urge people to start their retirement planning now, rather than waiting for the new rules to bed down.
“Planning your income in retirement doesn’t have to be painful but it’s important to engage early on and seek advice to ensure that retirement income is accessed in a timely and tax-efficient way.
“While the research shows that annuities still have a role to play, it’s clear the Class of 2015 don’t just want to get access to their cash in their pensions quickly. They want to take advantage of the freedoms to mix up what they do with their pension pots.
“For example, staying invested and drawing an income or leaving it invested for longer are now on the cards for a significant group.”