The new pension’s freedom rules giving far greater flexibility over what you can do with your pension pot came into force on 6 April 2015. But with great freedom comes great responsibility; while savers are positive about pension reforms they are also concerned about scams.
Scott Herbert, Partner and IFA from Clarke Nicklin Financial Planning has been taking a closer look:
In a survey by the National Association of Pension Funds (NAPF)* of 850 people aged 55-70 with private pensions, 47% who had a private pension were worried people would be miss-sold unsuitable products, 44% felt people might make bad financial decisions and two thirds (36%) were worried about pension scams.
And of the 850 surveyed, 49% with a defined contribution pension scheme would ‘wait to see how things work out nearer retirement’. A minority planned to buy an annuity and a further 4% wanted to take a cash lump sum. Nearly a fifth would leave their pension pots invested and draw a regular income.
The NAPF warned that those who were interested in investments and drawdown might not be fully aware of what it will or will not offer them. More than half said drawdown would provide them with a guaranteed income, and 45% thought that if they took no more income than they would through an annuity, their money would last until they died. In addition, 23% felt there were no risks with drawing a regular income from their pension pot.
*Survey conducted by the NAPF of 850 people aged 55-70 with private pensions and carried out as part of NAPF’s wider research to examine the nature of retirement for those recently finished work and those approaching it in the next 15-20 years.
Clarke Nicklin financial planning is a trading name of CNFP LLP, a Ltd Liability Partnership registered in England and Wales No.OC324909. CNFP LLP is an appointed representative of Lighthouse Advisory Services Ltd which is authorised and regulated by the Financial Conduct Authority
For more information, call 0161 495 4700 or email pensions@cnfp.co.uk