The surge in the number of people taking their whole pension pot as cash is likely to boost demand for equity release, according to the Pensions Advisory Service.
Speaking at the launch of a new report by the Equity Release Council yesterday (26 April), chief executive of the Pensions Advisory Service (TPAS) Michelle Cracknell said the pensions freedoms introduced in 2015 have led to more and more people taking out their pensions as a lump sum.
As a result of people pulling all the cash out of their pension pots, Ms Cracknell said people could be forced to look for alternative sources of income to provide financial support during their retirement.
Earlier this week figures from HM Revenue & Customs showed 393,000 people took out £6.45bn from pension pots in the 2016 to 2017 tax year.
That is an average of around £16,400 pulled out of pension pots per person.
The Pensions Advisory Service revealed it has seen a 143 per cent increase in customer enquiries since the relaxation of pension freedoms began in March 2014.
Ms Cracknell said the worlds of pension planning and equity release advice “are going to have to get closer together” over the coming years to manage the trend.
However she said there was still a reluctance to pull cash out of your property - despite the fact the recent HM Revenue & Customs statistics showed many people were clearly comfortable taking cash from their pension pots.
“Even though legislation has changed, it is going to take a long time to change attitudes,” she added. “People still feel slightly guilty [about equity release].”
But Ms Cracknell was optimistic about the future of equity release, arguing that future generations would be increasingly confident about using it to boost their retirement income.