Concerns that pensioners would take advantage of new rules to blow their savings on a cruise or new car have not materialised, experts at Richard Jacob Pensions and Trustee Services has reported.
New pension freedoms came into force at the beginning of April, fuelling speculation that some people would be encouraged to act irresponsibly.
The changes were even dubbed “Lamborghini Pensions” by one Government Minister.
The new rules abolish the requirement to convert a pension pot into an annuity – a product that provides an income for life – and leave people free to do whatever they like with their retirement cash. It means more than 300,000 people a year with defined contribution (also known as money purchase) pensions will be able to access them as they wish once they reach 55. They can cash in some or all of their pot and spend the money as they wish – although those withdrawing large sums are likely to incur a hefty tax bill.
“There has been no sign of mass withdrawals,” said Emily Jacobs, a Director of Richard Jacobs Pensions of Newcastle-under-Lyme.
“We have had requests from people who need modest sums for projects such as house renovations but the fears that people may blow their pensions have not materialised.
“Our advice is simple: Ensure you have enough to live on in retirement before contemplating the purchase of an expensive sports car, a Caribbean cruise or a new kitchen.”
Richard Jacobs Pensions has been advising people and companies about pensions for more than 20 years.
ENDS
For further information contact Emily Jacobs on 01782 557800.
Notes to Editors:
Richard Jacobs Pension & Trustee Services Ltd was established in 1992 and operates from offices at Brindley Court, Lymedale Business Park, Newcastle-under-Lyme.