Fears that huge numbers of people will cash out of pensions when the Budget freedoms go live in April next year appear to be unfounded, according to a Fidelity Worldwide Investment report.
Only 6 per cent of a sample of 500 people retiring between April 2015 and March 2016 plan to take all of their pension savings as cash, according to the firm. Almost a quarter of people who don’t expect to take their entire pot as cash plan to enter drawdown.
Meanwhile, some 15 per cent expect to buy an annuity after taking the tax-free lump sum, while a further 16 per cent plan to do nothing.
However, only 17 percent of people have a clear retirement plan in place, with a quarter saying they are waiting until the freedoms come in before firmly deciding what to do.
Fidelity Worldwide Investment retirement director Alan Higham says: “While the research shows that annuities still have a role to play, it’s clear the class of 2015 don’t just want to get access to their cash in their pensions quickly. They want to take advantage of the freedoms to mix up what they do with their pension pots.”