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Pensioners will not blow their savings on "luxuries"


Only 1% of those aged 50-75 years old have claimed that they will spend their pension pot on luxuries, according to a report from commercial firm Price Waterhouse Coopers (PwC).

Savers over 55 years old can now access their pension pots in full, thanks to the new pension reforms. However, experts have expressed concerns that many could blow their money on luxury items, leaving themselves open to poverty in their old age. The report showed that only 1% of 1,200 UK adults surveyed said they would use the entirety of their pot to “treat themselves”, and only 27% of people claimed that they intend to spend some of their money on general expenditure, treating themselves or on home improvements, unsecured debt and mortgages.

The report also showed that 67% of savers over 55 years old have factored in the certainty of income into their retirement in their decisions. Tax efficiency has also been on peoples minds, with 61% of people likely to consider it in when they are making a decision.

A total of 45% of respondents to the survey are looking to use their pension pot to draw an income by using a drawdown product, while 32% of respondents intend to invest some or all of their pension pot.

Raj Mody, PwC Head of Pensions Consulting, said:
"It's clear from this survey that consumers are open to a range of options for how to use their retirement finances. However, savers should weigh up their options carefully before drawing down pension savings, and incurring tax on them, as they would not generally be able to return their funds to a tax-privileged shelter once they have taken their money out. Also, if further flexibilities for annuities already in payment are introduced next year, for some people it may be sensible to wait until they know their full set of options, if they can, rather than make short-term decisions now in a rush."

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