47% not planning to use pension freedoms

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EXCLUSIVE: Almost half (47%) of UK adults are not planning to take advantage of the pension freedoms due to a lack of understanding, finance and confidence, according to research from Avacade Future Solutions.

Its report, which surveyed 2,003 UK adults, also found that 37% of respondents aged over 55s who are soon to retire are unsure how they will spend or invest their pension.

In addition:

  • Three-quarters (75%) of 18-44 year old respondents intend to take a cash lump sum when they retire.
  • 90% of respondents aged 18-24 plan to take a cash lump sum from their pension, compared to 42% of respondents aged 65 and over. 
  • 15% of respondents who plan to take a cash lump sum intend to transfer the money into a savings account, with 21% of respondents over 55s doing so.
  • 10% do not feel they have received sufficient guidance in order to make a wise decision with their retirement savings in light of the freedoms, and 13% are concerned they will make an irrecoverable mistake.
  • 18% are fearful of running out of money, and 14% do not have enough money to benefit.

Lee Lummis, managing director of Avacade Future Solutions, said: “The post-reforms research has reflected a nation of pension planners that are divided. 

“As with any industry shift of this scale, especially in such early stages, the degree of knowledge about the reforms nationally is in its infancy. That said, these early findings are a vital indicator of how the industry needs to deliver in the months and years ahead.

“A staggering 47% of those who have chosen not to respond to the reforms feel scared, unknowledgeable or financially ill-prepared to benefit from the changes, and of those who are looking to take advantage of the freedoms, the course of action is equally fragmented.

“The overriding sentiment that supports this report is essentially a nation hungry for better standards of living in retirement, with uncertainty in how best to achieve this.

“Moving forward, as knowledge and the impact of the reforms gains momentum, a huge responsibility lies with information providers to ensure pension planners feel confident in the range of options available to them, so as to assist with intelligent and relevant decision making. ”