Over-55s appear aloof about April’s pension reforms, with a new study finding that significantly more than half believe they will not be affected by the freedoms which come into force from next April and a majority remaining adamant they will not be revising their retirement plans.
This apparent disregard comes despite 78 per cent of unretired over-55s saying they are aware of the changes, which will introduce new income options in retirement and offer flexibility including the right to take an entire pension fund in one lump sum.
The ICM Research, conducted on behalf of Aviva, polled 1,202 people aged over 55-years during the second quarter this year.
The results accord with exclusive research commissioned by Friends Life for FTAdviser last month on the impact of reforms on savings habits, which polled more than 2,000 people and found three-quarters of over-55s and a majority of those aged 45-54 will not put more aside.
Of the 10 per cent who said in the latest poll their plans will be affected by the changes, 59 per cent said they are more likely to take some or all of their pension savings as soon as they can.
A little more than a third said they may take some of their pension savings as a lump sum to fund their retirement, while a further 14 per cent will do the same but to pay off their mortgage. Close to half said they do not see any advantage in taking a single lump sum.
More than half (52 per cent) of retired and unretired over-55s said they think they will have enough money in retirement, while just 17 per cent thought they would not have enough money.
Money worries were overshadowed by more fundamental ageing issues, such as ill health (56 per cent), dementia (50 per cent), being dependent on other people (36 per cent) and going into a care home (30 per cent).
The results will abate fears that people might spend their money irresponsibly and fall back on the state, and could provide succour for annuities firms which stand to benefit the most from continuity in retirement plans.
However, Aviva suggested the findings that just one in ten believe reforms will affect their plans suggests many do not yet fully understand the significance of the changes.
Clive Bolton, Aviva’s managing director retirement solutions, said the results of the research showed that there was a huge amount of education work needed.
“It’s great that awareness about the changes is high, but people really need to understand that these changes do more than just open up choice – they also change the rules and tax implications on how people use their savings.
“And with the latest announcement on pension tax changes [the abolition of the ‘death charge’], the picture for consumers is even more complex,” Bolton added.
peter.walker@ft.com
