View more on these topics

Small pots most likely to cash out, research finds

File image of a pension savings potThe size of an individual’s pension pot is a key factor in determining how they exercise their pension freedoms at retirement, according to research from the Pensions Policy Institute.

In a paper published yesterday the PPI looks at how the introduction of freedom and choice in pensions has opened up new ways for individuals to access their pension savings.

The report is the first in a series of two and also explores the ways in which the freedoms have added to the challenges people face in the run up to retirement.

It says pots that are fully withdrawn are smaller on average than those used to purchase retirement income products with 90 per cent of withdrawn pots worth less than £30,000.

This contrasts with 30 to 46 per cent of pots used to purchase retirement income products.

The average size of a fully withdrawn defined contribution pension pot is £14,500, while larger pots are likely to be used to provide a regular retirement income, either through an annuity or regular patterns of drawdown.

The PPI also draws on FCA figures which show drawdown products are popular across all age groups.

Between October 2016 and September 2017, drawdown product purchases accounted for 30 per cent of those made by people aged between 55 and 64 and 34 per cent for those aged under 55 or 75 or older.

For those aged between 55 and 64, drawdown products were more than three times as popular as annuities, while those aged 75 or older were twice as likely to purchase a drawdown product as opposed to an annuity.

Recommended

6

Hot Money: Assessing three years of pension freedoms

As the pension freedoms approach their third anniversary, advisers are reflecting on how the watershed policy has affected both their businesses and their clients. Clients have benefited from being able to access flexible drawdown and to use their pension to help fund inheritance. They are able to transfer out of defined benefit schemes and are […]

Technology-People-Moving-Business-Finance-700.jpg
3

Aegon completes move of 400,000 Cofunds’ clients to new platform

Aegon has completed its technology upgrade of Cofunds’ advised customers, moving more than 400,000 clients to a new platform over the weekend. Cofunds investor portfolio service and institutional service upgraded to the new Aegon platform in December and March, respectively. Aegon chief distribution and marketing officer Mark Till says through the three upgrades more than […]

UK-Houses-Building-Homes-700x450.jpg

UK housebuilders: political risk on the rise

Mark Martin, Head of UK Equities, Neptune As expected, the Autumn Budget contained multiple policies directed towards the Government’s stated desire to support home ownership and housebuilding.  It did not include any significant measures to solve the housing shortage, however. Read article Important information Investment risks Neptune funds may have a high historic volatility rating […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. For pensioners, these problems are increasingly relevant day by day, it is not clear how to solve quickly and painlessly for them and society.

Leave a comment