Many people do not yet fully understand the
significance of the new retirement income choices
Many of Britain’s over-55s say the massive changes to retirement income announced in last year’s Budget 2014 will have no impact on them, research from Aviva’s latest Real Retirement Report shows.
As well as more than half (55%) of Britain’s unretired over-55s saying they won’t be affected by the freedom and choice changes, which take effect from 6 April 2015, half (54%) are also adamant they won’t be revising their retirement plans.
The apparent disregard for the pension changes comes despite 78% of unretired over-55s saying they are aware of the changes, which will enable people to use their pension savings how they wish, including taking all of their money in one lump sum.
Only one in ten (10%) say the changes will affect their plans, suggesting that many people do not yet fully understand the significance of the new retirement income choices, including the tax implications.
Of the 10% who say their plans will be affected by the changes, the majority (59%) are more likely to take some or all of their pension savings as soon as they can, 34% say they may take some of their pension savings as a lump sum to fund their retirement, and 14% will do so to pay off their mortgage.
However, half (49%) of all unretired over-55s say they do not see any advantage in taking their pension savings as a single lump sum, suggesting that many people will be cautious of spending too much, too soon.
Despite rising concern about people running out of money in retirement, more than half of retired and unretired over-55s (52%) say they think they will have enough money in retirement. But 17% think they won’t have enough money, and more than a quarter (27%) will only go as far as to say they may have enough.
Concern over running out of money comes nowhere near the worries people hold over more fundamental ageing issues:
– Ill health (56%).
– Dementia (50%).
– Being dependent on other people (36%).
– Going into a care home (30%).
– Dying or people close to them passing away (25%).
– Running out of money in retirement because I have spent up (8%).
– Living longer than I expect and not having the money to fund my retirement (5%).
The Aviva Real Retirement Report is produced by Aviva in consultation with ICM Research. The Real Retirement tracking survey referenced has been running since 2010 and totals 19,193 interviews amongst the population aged over 55 years. 1,202 people aged over 55 years were polled for this Q2 2014 wave of research.