Savers plan to withdraw an average £27,000
Amid greater flexibility in the pensions market, with new freedoms introduced on 6th April 2015, savers are planning to withdraw large sums from their retirement fund this year, a study has found.
A study commissioned by financial and technology services firm True Potential has found that savers plan to take an average £27,000 from their funds in the 2015/16 tax year.
The new freedoms mean restrictions on access to funds has been lifted and 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.
True Potential’s independent survey (of over 2,000 people) also found that:
- Only 8 per cent of savers plan to withdraw their entire pension in one lump sum following the changes.
- 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.”