View more on these topics

So what are savers doing with the new freedoms?

Back in May, Steve Herbert, head of benefits strategy at Jelf Employee Benefits, was involved in a Corporate Adviser magazine roundtable on the subject of pensions. 

The timing of the event was significant, given that the new pension freedoms announced by the chancellor in March 2014 had just become fully available to many pension savers in the UK. As you will be aware, this rule change allows savers over age 55 to access their pension savings in a variety of formats that were not previously permissible.

The host of the event was the insurer Royal London, and it had taken the opportunity to ask those withdrawing their retirement savings how they were intending to spend the money. The answers, as reported in this article, make for interesting reading:

  • 35 per cent will pay off debts
  • 22 per cent will use the money to fund home improvements or a new conservatory
  • 15 per cent will invest in an alternative arrangement (such as an ISA or property)
  • 11 per cent will buy a car or caravan
  • 11 per cent will use the money to meet general living expenses
  • Six per cent will spend it on a holiday

Admittedly, it is early days (and these figures a very early indicator) and these findings may not be indicative of long-term trends. Yet these figures are surely concerning given that so few of the disinvestments are being used for anything other than short-term financial needs (as opposed to the long-term retirement income they were originally intended for). It is therefore entirely possible that at least some of these individuals will have made snap decisions that may well result in a rather impoverished retirement.

In our view, the above strengthens the need for savers to better understand the true dynamics or retirement savings, and indeed the options now available from age 55 onwards. We would therefore encourage employers to consider whether they have done enough to communicate these changes, and/or offer financial education and guidance to their employees as an important part of the wider benefits offering.



Osborne to shake up housebuilding with planning reforms

Chancellor George Osborne will today unveil a raft of new measures designed to boost housebuilding by reforming the planning system. Under the new proposals, automatic planning permission would be granted on many brownfield sites in England, while major housing projects could be fast-tracked, and rules on extensions in London relaxed. The reforms would also see […]

FCA logo glass 3 620x430

FCA joins Deutsche Bank anti-money laundering probe

The FCA is in the early stages of investigating whether Deutsche Bank breached anti-money laundering laws for its Moscow clients. The FT reports the FCA’s involvement adds to inquiries by at least two other bodies around the world into so-called mirror trades executed in London and Moscow by the bank. Earlier this week, it was […]

Govt issues call for evidence on deeds of variation ‘abuse’

The Government has launched an open consultation into deeds of variation for tax purposes. In the March Budget the Government announced it would review the use of DoV for tax purposes. It is now calling for evidence on how often and in which circumstances DoV are used to reduce tax. The Government says it wants […]

Otto Thoreson 700.jpg

Nest Govt loan soars 30% to £387m

Nest’s loan from the Department for Work and Pensions loan has soared by 30 per cent to £387m in just 12 months, its annual report shows. To the end of March 2015 the auto-enrolment scheme’s loan stood at £387m, up from £300m a year ago. A Nest spokeswoman says: “The loan covers set-up and operational […]

Childcare - thumbnail

Three questions for employers…

The Family and Childcare Trust’s annual survey has been widely reported in the media and the two headline figures were these: the average cost of a nursery place for a child under two has risen by 33 per cent since 2010; and the costs have risen by five per cent in a single year.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm