In March 2014, Chancellor George Osborne announced radical reforms to UK pensions, including greater flexibility to access pension money, changes to tax rules on pension withdrawals and free advice for pensioners. Yet, six months later UK adults are still confused as to what the changes mean and how best to take advantage of them.
This is according to research from online broker TD Direct Investing. Between 4-10 August 1,000 UK adults aged between 25-75 were surveyed online. The results were then extrapolated to give representative figures.
The survey found that only 29% of UK adults think the pension changes will benefit them financially.
Despite a generally positive attitude towards the changes, with seven in 10 (70%) welcoming the greater flexibility to access their pension pot, there remains a lack of understanding as to what the changes actually mean, as well as uncertainty over how best to take advantage of the new rules.
The contrast between the positive attitude towards the changes and the perceived benefits is clear, with over half (51%) of UK adults finding the changes to pension policy confusing.
Additionally, there is a perceived lack of information and advice available, with 69% claiming they need more professional help to decide how to make the most of their pension money. This is compounded by less than a third (30%) being aware that free advice for pensioners is available.
John Tracy, head of TD Direct Investing Europe, said: “While the new pension rules announced by the Chancellor are a great step towards empowering British people to make their own investment decisions, today’s results show that more needs to be done to educate consumers on how to get the best results from their savings.”
Tracy added: “The industry needs a greater focus on financial literacy and education in the UK to help British people get the most out of their money. The marketplace can be complex and confusing, and the recent industry changes in the UK have created a need for a clearer, simpler investing environment.”
The research also found that 64% believe that they can make more money from their pensions if they reinvest smartly, however only 34% feel confident that they can make their own decisions about how to reinvest their pension money wisely.
Pension Reforms & Equity Release
What Is Equity Release?
Equity release is the use of financial arrangements that provide the owner of a house, or other property, with funds derived from the value of the property while enabling them to continue using it.
How Does Equity Release Work?
Equity release is aimed at homeowners aged 55 and over. It allows you to take some of the value of your home as cash.
Equity Release as a Retirement Strategy
The market is evolving to meet a growing consumer need for equity release. Pensions are no longer adequate for many approaching retirements, and rising redundancies during the pandemic have added to the pressures. Retirement finances are increasingly squeezed as generous final salary pensions edge further to extinction. Many older households are already facing a situation where their expenses outweigh their disposable income.