16th April 2014
Investors are unlikely to blow all their pension money with just 5% planning to take all their money from their pension savings and rely solely on the state pension.
The research by Consumer Intelligence of more than 1,000 adults shows that annuities still form a significant part of savers plans but just 9% plan to rely on an annuity entirely.
Willingness to spend depends in part on how much savers have – 44% of those with a pension pot £30,000 will use it all to provide retirement income whereas only 14% of those with a fund of £250,000 would do so.
While, just 9% of those asked say they will rely purely on an annuity for retirement income, 26% intend to use a mixture of annuity, drawdown and cashing in. Some 14% will use an annuity alongside cashing in part of their funds and 7% would consider annuity as well as drawdown for their pension funds.
Retirement savers want the free pensions guidance promised by the Government to everyone retiring from April 2015 to be delivered face to face, a new survey by Consumer Intelligence shows.
The study found 69% of retirement savers want their options explained in a formal session with a qualified adviser. Another 24% would be willing to use online services as long as there was human help available too. Just 3% want to rely solely on online help.
On average, retirement savers would be willing to travel 11.4 miles for face-to-face guidance with only 8% happy to travel more than 25 miles.
The promise of guidance is part of the pension revolution outlined in last month’s Budget including greater freedom and flexibility on how people use their defined contribution pension savings.
David Black, spokesman for Consumer Intelligence, says: “Decisions about retirement income are ones that people literally have to live with so it is clear that people want to take them seriously.
“Face to face guidance is by far the preferred option for the free advice proposed by the government with most people willing to travel to ensure they get as much help exploring their options as possible.
“However, it does appear that claims about people blowing all their cash on Lamborghinis are not going to come true. Most people realise that they will be retired for a long time and that they will need to ensure that they have enough income to last.”
The research also shows strong support for the pension reforms with 80% backing the freedom to organise their own incomes.
The table below shows intentions with pension funds once the new pension rules come into effect from April 2015.
|WHAT WILL YOU DO WITH PENSION FUND?||PERCENTAGE|
|Keep a small nest egg for retirement and spend the rest||26%|
|Save it all for retirement income||20%|
|Save most of it for retirement income||46%|
|Spend it all and rely on State Pension||5%|
|Spend it all as have other sources of income||3%|
Online survey conducted by Consumer Intelligence of 1,016 adults aged 40+ who have a private pension conducted between March 27th and April 2nd 2014.