Nearly two-thirds of yet-to-retire Brits (62%) say they think giving people more choice and flexibility in how they take their retirement income is a good idea, according to research from Aviva.
Awareness about the retirement income changes announced in this year's Budget is high, with 80% of people saying they have some level of knowledge of them. In the 2014 Budget, the government announced it planned to give people more freedom in how they take their retirement savings, and from April 2015 people aged over 55 will be able to take their defined contribution pension savings as they want, subject to their marginal rate of income tax.
Just over a half (52%) of those asked in the Aviva research think people can be trusted to spend their retirement savings wisely. And there is strong support for having control over their finances (63%), which will allow them greater freedom to do what they want with their money (67%).
Restraint will be needed
Despite support for the changes, 61% of people say that as the pension rules are relaxed, individuals will need to show greater restraint in coming years to avoid spending all of the money earmarked for their living costs.
Running out of money
Nearly a quarter (22%) say they do not feel their retirement income will last for the whole of their lifetime, and 42% say it will last while they are still active. But a third (34%) feel their savings will last for the whole of their retirement. Men are much more likely than women to be confident that their money will last their lifetime (41% vs. 27%). In addition, 27% say they do not worry about their finances and 31% say they just live for today.
Most affected are the soon-to-be-retired
People retiring within the next year are more likely to say that the Budget changes will affect their retirement plans (57%), compared to those retiring in the next two years (21%), and in five years (17%). A third of people (34%) say the changes will make no difference to them and more than a quarter (27%) say they do not know how their plans will
be affected.
Family and friends are top for guidance
When it comes to guidance and support on their retirement plans, just under half of people say they turn to friends and family (45%), with women more likely than men (52% vs. 45%). Pension providers also rank highly (33%) together with independent financial advisers (28%) and the Pensions Advisory Service (24%).
While more than a quarter (28%) of people say they have enough knowledge to be able to make the right decisions about their retirement, 41% say that although they have some knowledge they would benefit from further help, and 30% admit they are lacking in their understanding. Women are more likely than men to say they have a lack of knowledge (39% vs. 23%). Being close to retirement is also an indicator of how well informed people feel about the changes, with those retiring in the next year saying they feel confident about their level of knowledge (72%).
Clive Bolton, Aviva's managing director, retirement solutions, said: “It's good to see that consumers support the government's changes to retirement income, and are confident about the opportunities that increased flexibility and choice will bring them. It's clear that people will need support and guidance as they choose how to make the most of their savings, particularly as many are concerned about running out of money over what could be a long and
varied retirement.
“With additional flexibility, people are increasingly likely to adjust or change their retirement income decisions as their needs evolve over the retirement years. Having access to a range of robust solutions that suit different needs, as Aviva offers, will be important. Retirement solutions such as pensions, annuities, income drawdown and equity release will continue to have a role to play in people's retirement plans."
For more information visit Aviva's Retirement Centre at Aviva's Retirement Centre HERE.