Using freed-up pension funds to invest in buy-to-let is a move that will need careful consideration, a business head at Prudential has warned.
Vince Smith-Hughes, head of business development for retirement income at the life and pension provider, predicted that most pension providers would be inundated with requests from their oldest investors to withdraw their pension cash on 6 April.
He said investors would be best off not making any decisions until they had taken advice. “A lot of talk has been about buy-to-let as a potential home for some of the pension cash. But people need to think about their circumstances.
“Taking their money out of a tax-efficient wrapper, their pension, and putting it into an investment which will not be so tax efficient, is something that might not be appropriate for everyone”, he added.
According to Mr Smith-Hughes, Prudential has taken on extra staff to cope with a rise in enquiries from pension investors after the changes come in on 6 April who had not taken out their retirement policy through an adviser.
He said Prudential had two lines of defence and would be – where possible and where appropriate – referring investors to The Pensions Advisory Service, Citizen’s Advice and also through TPAS’ website, Pension Wise.
Andy James, advice policy manager at Towry said: “With freedom comes risk and responsibility, and there is certainly a risk that many people may run their pension fund down too early if they do not rigorously plan their retirement against their existing funds. This risk remains just as compelling for pensioners swapping their annuity in retirement.”