Retirees transfer £1bn out of their pensions under new freedoms

16th June 2015

img

Around 60,000 people have made use of new rules to release £1bn from their pensions, the Chancellor has told MPs.

In April, the Government brought in unprecedented new freedoms for retirees, which in principle give them the flexibility to spend their pension pots as they choose.

However, some pension companies have not updated their products to allow retirees to take advantage of the new rules.

Adrian Walker, retirement planning manager at Old Mutual, says: “The Chancellor has suggested that more than £1bn withdrawn from pension funds since the April reforms constitutes a success. The UK has a problem with saving, not spending, so care needs to be taken when deciding how to measure the success of the pension freedoms.  I would suggest that a more appropriate measure of success will not come for many years, when those people who have withdrawn money from their pensions are still enjoying the retirement they planned and saved many years for. ”

Tom McPhail, head of pensions research at Hargreaves Lansdown, says: “This announcement comes on the 20th anniversary of drawdown’s introduction under the Conservative government of the mid 1990s. George Osborne has built on the foundations of his predecessor, first by abolishing the requirement to buy an annuity back in 2011, and now giving investors complete freedom to draw on their pensions. Whilst the number of people taking money from their pensions has not significantly increased, the way they are doing so has, with less than one in ten of people currently choosing to buy an annuity, compared to 8 or 9 in ten only a couple of years ago.

“This is a reform of equal magnitude to the Right to Buy council house sales revolution of the 1980s; in the same way that Margaret Thatcher introduced millions of people to home ownership, George Osborne is now introducing millions of people to pension ownership.”

2 thoughts on “Retirees transfer £1bn out of their pensions under new freedoms”

  1. Jive Bunny says:

    “This is a reform of equal magnitude to the Right to Buy council house
    sales revolution of the 1980s; in the same way that Margaret Thatcher
    introduced millions of people to home ownership”

    Ahhh yes Council House sales of the mid 80’s, which then gave way to record re possessions in the late 80”s and early 90’s as people who simply weren’t credit worthy (the council tenants buying their rented properties – sub prime any one?!) defaulted and were made homeless at the rate of 70,000 re possessions a year at it’s height!!!

    30 years after “the experiment” we find that home ownership is no higher than it was before “Right to Buy” mark 1. So another failed “revolution” on Thatcher’s watch, unless, the plan had always been to cynically offload council property to evade any responsibility for it’s upkeep…..

    1. Jive Bunny says:

      ….so be very very careful of a Conservative bearing “gifts”…..

Leave a Reply

Your email address will not be published. Required fields are marked *