Over 55s Unmoved By Pension Reforms

The majority of people aged over 55 do not think the government's pension reforms will impact them, according to a report by Aviva.

From April 2015, retirees will have greater freedom to choose how they access their pension savings. This includes being able to take lump sums without incurring a 55% tax charge on withdrawals above the 25% tax-free limit. Instead, withdrawals will be taxed at the person's marginal rate of income tax.

Aviva found that 55% of over 55s say they are unaffected by the new pension freedoms while 54% said they have not changed their retirement plans since they were announced.

The survey of more than 1,200 over 55s found:

•    just 1 in 10 said the changes have impacted their plans. Of these:
o    59% are likely to take some or all their pot as soon as they can
o    34% might take some as a lump sum to fund their retirement
•    14% said it could be useful to take a lump sum to pay off the mortgage
•    49% of all over 55s do not see an advantage in accessing their pension as a lump sum.

Clive Bolton, managing director of retirement solutions at Aviva, said:

"It's great that awareness about the changes is high, but people really need to understand that these changes do more than just open up choice - they also change the rules and tax implications on how people use their savings. And with the latest announcement on pension tax changes, the picture for consumers is even more complex.

"It is not simply a choice between taking savings early or choosing a retirement product, there are implications that could leave retirees better or worse off at a time when they need to maximise their savings."

A third of UK adults expect to inherit money or property from family members, according to a survey by GoCompare.com.

The price comparison site polled more than 2,000 people and found 33% expect they or their partner will inherit assets. Four in 10 (41%) of these predict the inheritance will be worth more than £50,000.

A quarter of respondents said they expect to inherit more than £100,000.

The survey also found:

•    43% of respondents said that inheriting money would be helpful but not essential
•    13% would prefer their parents or in-laws to spend their money on themselves
•    6% feel they do not need to save money because they will eventually inherit money or property
•    8% said that they could get into financial difficulty if they did not inherit.

Matt Sanders, money spokesman at GoCompare.com, said:

"For most of us, inheriting money from our parents or grandparents is something we'd rather not think about, due to the circumstances surrounding it. But for some it seems the amount that they may inherit isn't just an active consideration, it's a retirement plan.

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