Amid sweeping changes to the pensions market, savers are planning to withdraw an average £27,000 from their retirement fund this year, according to our latest research.
Despite fears of a mass clearing out of retirement pots in the wake of this month’s introduction of new pension freedoms, our research suggests that most savers are planning to take an average of just £26,979 from their funds in the 2015/16 tax year.
New freedoms introduced on 6th April mean restrictions on the amount of money that can be withdrawn from a pension fund and the level of guaranteed income savers have access to, have been lifted.
Savers aged 55 and over can now take their whole fund in one go, take smaller Uncrystallised Fund Pension Lump Sums when required or take up to 25% tax free and a regular taxable income from the rest.
Our independent survey of over 2,000 people, part of our ‘Tackling the Savings Gap’ Campaign, also found that only 8% of savers plan to withdraw their entire pension in one lump sum following the changes.
Meanwhile, of those savers who plan to change the way they access their pension as a result of the changes, 53% say they have no plans for any withdrawals this tax year.
True Potential Managing Partner David Harrison said: “With pension freedoms now in place, many savers look set to take advantage of them. Our research shows that on average, savers will take almost £27,000 from their total pension fund this year.
“For some people that will be a tax free lump sum while for others it will mean drawdown from the remainder. Giving people the option to decide when they drawdown from their pension and by how much is a positive step as long as they are aware of the effects on the overall fund.
“There have been many scare stories about people exhausting all of their savings in one go. These figures show that this is unlikely to happen. Instead people can approach retirement with new options and aspirations versus the constraints of a fixed, usually poor-performing, annuity.”
If you’d like to find out more about how the new pension freedoms affect you, speak with your financial adviser. If you do not have an adviser, you can search our directory for your local Wealth Management Partner.
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