Pension flexibility preference varies on size of savings

Pension flexibility preference varies on size of savings

Savers with smaller pension pots tend to prefer the safety of a guaranteed income while those with more saved often opt for greater flexibility, according to research from EValue.

Individuals with less than £50,000 saved favour the guaranteed income of a product of an annuity, but those with more than £50,000 in their pension pot are increasingly likely to want more flexibility with their income, according to research of more than 52,000 consumers.

Of those with a retirement fund of more than £150,000, 66 per cent favoured flexible income retirement options, compared to 40 per cent of those with up to £50,000 in savings.

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Men also had a tendency to be slightly more adventurous with their money than women, where around half of men opted for flexible income compared to less than half of women surveyed.

Bruce Moss, founder and strategy director at EValue, said there was a “strong correlation” demonstrated in the research between the preference for flexible income and higher pension savings.

He said this was “very rational” as the additional costs with flexible income are easier to justify and risks can be more easily withstood with more money in a pension.

“The risk of variations in the level of the income which is sustainable for life may be easier to shoulder and there is a stronger sense of ownership as pension assets increase.”

Mr Moss added that men tend to favour more flexible retirement options partly because men also have more saved and are more favourably inclined to flexible income.”