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38% of people to take advantage of pension freedoms


A new study conducted by 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.

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