7th Oct 2015 05:49
LONDON (Alliance News) - Standard Life PLC on Tuesday said only a small portion of its pension customers in the UK have made use of the new freedoms given to savers this year, with the majority choosing not to touch their pensions and remain invested.
In last year's Budget, UK Chancellor George Osborne announced changes which allowed people over 55 years old to use their pensions savings as they please and removed the requirement for them to purchase an annuity. Critics had cautioned the changes would leave thousands of pensioners without an adequate pension in retirement, spending the money on luxuries instead.
But Standard Life, the FTSE 100-listed life insurance and investment management group, said only 6% of its eligible customers have made use of the new pension freedoms since they came into force in April this year, with the remaining 94% deciding to stay invested and leave their pensions untouched.
In addition, 66% of people entering a drawdown arrangement with Standard Life since April 6 have taken their 25% tax free cash and left the remainder of their pots invested, rather than taking an income immediately.
"The overwhelming majority of our customers have chosen to remain invested, debunking initial predictions that those at retirement would cash in their pots hastily and incur a significant tax charge, leaving them penniless at retirement. What we?re seeing in fact is calm, considered decision?making from customers," said Jamie Jenkins, the head of pensions strategy at Standard Life.
By Sam Unsted; [email protected]; @SamUAtAlliance
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