One in four to pass pension on: Prudential

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One in four to pass pension on: Prudential

A quarter of couples plan to use the pension freedoms to make sure they leave an inheritance for their families, according to Prudential.

The new rules simplified the process of passing on unused pension savings to a nominated beneficiary upon death, without paying the 55 per cent tax charge, however many couples have decided they want to pass on cash sooner so that their families do not have to wait for an inheritance.

Six months after the reforms were implemented, the insurer’s annual study into financial attitudes and retirement planning found that 16 per cent of couples plan to use the new rules to give money to their families to help them buy a new home, pay for education or raise the standard of living.

Research was conducted by Consumer Intelligence during July among 1,019 UK adults aged 40 plus who currently live with their spouse or partner, also showing their own retirement priorities included taking a holiday (26 per cent), paying off debts (25 per cent) and home improvements (17 per cent).

One in six said their priority was to seek financial advice before making any decisions.

In terms of concerns found during the survey, a third of respondents were worried about running out of money in retirement, followed by making mistakes in retirement planning (15 per cent), making decisions leading to unnecessary tax bills (13 per cent), being faced with too many retirement income choices (9 per cent) and falling victim to fraud (7 per cent).

Vince Smith-Hughes, head of business development for pensions at Prudential, said the figures show that for many people there is balance to be struck between passing money onto their family and funding their own retirement.

“For many couples we spoke to retirement is still a long way off – our previous research has shown a growing trend for people to work well beyond what have traditionally been seen as the standard retirement ages.

“With this in mind it’s never too late to start saving as much as possible to boost your pension pot to ensure that you and your family are as comfortable as possible in the years to come.”

He added that for most people, consulting with a financial adviser will help make the most of these choices, “and for those with defined contribution pension savings aged 50 or over the government’s free and impartial Pension Wise service offers valuable guidance”.

peter.walker@ft.com