38% of people to take advantage of pension freedoms
26/02/2015
A new study conducted by holidaycottages.co.uk shows that 38% of people over 50 are looking to use the new pension freedoms to access additional funds from their pension. Out of these people, 20% would use the money to invest in property.
The new pension reforms, being introduced in April, mean that savers over 55 will be able to take out 25% of their pension tax free, and will only pay the marginal rate of income tax on anything more they withdraw.
The study shows that 38% of people will look to take additional funds from their pension to invest in property, 42% will use their savings to go on their dream holiday, and a many pensioners may combine the two and buy a holiday home abroad.
Pension experts have expressed concern that many savers will not understand the implications of accessing large amounts of their pension, and may potentially leave themselves open to having little money in their later years. The Financial Conduct Authority is also concerned that savers could face unexpected tax bills or in the worst case scenario fall victim to fraudsters.
The FCA said:
“Providers will be required to give relevant risk warnings, such as warning of the tax implications of their decisions, in response to answers from consumers.
'The decisions consumers make about what to do with their pension pot are important and in some instances these choices are irreversible. We want to make sure that people have the help they need to make those choices.”
Chancellor George Osborne, who introduced these reforms, said he believes people can be trusted to use their money responsibly, and should have the freedom to use it whenever and on whatever they see fit.
Need financial advice?
If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.
Share this..
Related stories
Who will save the final salary pension schemes?
As the stock market continues to trawl around the 4,000 level there are growing concerns that the final salary pension scheme sector may never recover from recent falls. These are the scheme where your pension upon retirement is calculated using your final salary and the time you have served with your employer. It has nothing to do with investment returns and there are real concerns that we will...
Read MoreLord Myners under pressure as RBS pension saga rolls on
Treasury Minister Lord Myners is today under serious pressure after a letter from former Royal Bank of Scotland chairman Sir Tom McKillop flatly contradicted the minister's recollection of Sir Fred Goodwin's pension agreement. There seems to be some confusion as to whether Lord Myners was informed of the size of the pension fund and the impact which early retirement would have. In an earlier discu...
Read MorePension gap between men and women continues to grow
It has been revealed that the pension gap between men and women continues to grow with the average male retiring in 2010 likely to receive a pension income in the region of £19,593 a year against just £12,169 for a woman retiring at the same time. The gap between the two has increased by £782 over the last 12 months and while much of the gap can be credited to various career breaks many women h...
Read MoreLack of confidence in pensions
A survey has revealed that people are seeing a lack of savings for their retirement due to a lack in confidence in pension investments. 71% of those asked identified that they were scared about making the wrong decision, compared with 47% who put it down to a lack of knowledge and understanding of how to go about saving with a pension. A campaign to raise awareness of a new pensions system mean...
Read MoreBlue-chip companies battered by pension storm
Blue-chip companies in the UK are now using £2 out of every £3 in pension scheme premiums to reduce their liabilities as opposed to investing in employee benefits for the future. A report by KPMG indicates that overall there has been a £15 billion increase in pension fund liabilities for FTSE 100 companies during 2010 so far. The figure now stands at £65 billion which is an enormous 50% increa...
Read More