Fewer than 1 in 10 retirees will take their entire pension savings as a lump sum when the government’s pension reforms are introduced in 2015, according to research by Fidelity Worldwide Investment.
The survey of 500 people retiring between April 2015 and March 2016 suggests that new pension freedoms have not tempted the majority of next year’s retirees to withdraw their entire pot.
More than half (54%) said they will take advantage of the changes by taking a portion of their pension as a lump sum, while 37% intend to only take the tax free portion.
Of those retiring in 2015 who are not taking their whole pension as a lump sum:
- 23% will transfer their pot into a drawdown pension
- 18% will combine a drawdown pension with an annuity
- 16% will buy an annuity
- 16% will keep their pot invested.
The survey also reveals:
- 17% of 2015 retirees have a clear plan for their retirement
- 15% will review their existing retirement plan following the Budget changes
- 75% will seek advice to help with their decision making
- 35% will go to an independent financial adviser, 21% will turn to friends and family, and 20% will ask their pension provider.
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.”
