More over-55s working longer
Freedoms ‘raise awareness, but confusion remains’
Pension freedoms: 64% are confused by regulations
Three years on from the Pension Freedoms revolution people are saving more for their retirement, but many over-55s are confused by the regulations.
The research, which marks the third anniversary of the introduction of the rules, reveals that over-55s are planning to work for longer than they had originally planned – and about 12% say they or their partner will work full-time or part-time past their original planned retirement date.
More than one in ten (11%) working over-55s say they have started saving into a pension for the first time, have encouraged their partner to save more, increased pension contributions, or restarted pension saving since the rules came into effect from April 2015. One in seven (14%) are also making more effort to learn about retirement savings.
However, the freedoms, which give everyone aged 55-plus flexibility on how to use their defined contribution pension funds, are not a total success with savers and the retired, according to the research by Prudential.
Nearly two out of three (64%) of over-55s say they are confused by the regulations and the overwhelming majority (82%) want an end to any further Government changes to pension rules.
More than one in three (42%) are concerned about running out of money during retirement while 41% worry about paying for long-term care.
Vince Smith-Hughes, a retirement income specialist at Prudential, said: “The reality of Pension Freedoms is hitting home as consumers begin to understand that they are responsible for ensuring they have enough money to last throughout their retirement.
“The fear that they might run out of money is forcing them to take a long, hard look at how much they should be saving to ensure they have the retirement they want.
“Pension Freedoms have in many cases shifted the responsibility for making a pension fund last throughout retirement directly onto consumers.
“Previously most people bought an annuity to guarantee an income for the rest of their lives. Now they can drawdown as much money as they like but the risk is that they run out of money in their lifetime.
“The fact that many over-55s are preparing to work longer and save more highlights that they recognise this risk and a responding in a rational and responsible way.
“The best thing most people can do to ensure a comfortable retirement is to take financial advice, while also trying to save as much as they can into a pension, especially a company based scheme where they’ll immediately take advantage of contributions from their employer.”