Over a quarter of those planning to retire are now more likely to increase their pension contributions as a result of the new pension freedoms set to come into force in April 2015, according to Association of Investment Companies research.
Around 44 per cent of the 3,147 UK adults in full-time work, aged 40 or above, with a gross personal income of £50,000 or more, said that the new changes made them feel more positive about pension schemes.
Some 70 per cent of consumers said that the flexibility to access their money should circumstances change made them feel more positive towards pension schemes, whilst 60 per cent said the positivity was a result of the flexibility to invest their money in other assets and withdraw cash as needed.
In contrast, 27 per cent of respondents said they did not know how much of their pension pot they would be willing to invest in an annuity and only 2 per cent said they would be willing to use their entire pension fund to buy an annuity.
Around 72 per cent cited the impact of inflation on a level annuity as the top reason that might discourage them from purchasing an annuity.
The AIC said that as consumers “warm-up” to the new pension changes, they are going to need advice to help to fully benefit from them.
The organisation said: “Inflation, the inability to pass on assets after death and the inability to cancel an annuity were suggested as key reasons discouraging consumers from purchasing annuities.
“This suggests that many consumers would benefit from good quality, independent advice to help them consider their options and build a tailored portfolio to meet their needs in retirement.”
Ian Sayers, director general at the Association of Investment Companies, added: “Whilst consumers welcome the new pension freedoms, many are not certain about how they will take advantage of them. For those who see a secure income as critical, an annuity may well remain the best option.
“But there is also a significant body of consumers who appear willing to consider other options which might help protect their income against inflation and allow them to hand on assets to their friends and family. These raise challenging questions, which is why the AIC believes that good quality, independent advice will be crucial for many.
“This is a real opportunity for financial advisers to develop new relationships with some of their clients which last well after the day they decide to retire. And for those clients that can accept the risks, investment companies are an obvious candidate for part of a long-term income portfolio in retirement.”
