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Hands off our pension freedoms, say consumers

15 February 2018

Pension savers do not want the government to curb pension freedoms, according to new research by Aegon. 

In response to the Work and Pensions Select Committee hinting at recommendations to restrict the pension freedoms, 72% of people said they believe the freedoms help the transition into retirement.

Only one in four said they would be in favour of increasing the age at which they could access their pension beyond 55, although most expect to wait until they are at least 60.

Recently, the Work and Pensions Select Committee carried out an inquiry looking at whether there are risks associated with pension freedoms, and there were suggestions that they may recommend new restrictions to be imposed by the government.

As the third anniversary of the pension freedoms approaches, Steven Cameron, pensions director at Aegon, said talk of restricting access had been prompted by concerns that people may run out of money in retirement by overspending or investing unwisely.

He commented: “The consensus amongst those we spoke to is that the freedoms should remain broadly unchanged. They’re seen as hugely helpful as a means of gradually moving out of the workforce by enabling people to start drawing an income that they can supplement with part time work.”

The research found that four out of five people said they wanted choice over where to invest their pension when moving into flexi access drawdown, although 63% said they were open to a default investment option for those who made no active decision.

However, when asked if they felt the government should restrict pension freedoms where people can’t prove they have enough other secure income, including any state pension, to cover their essential costs in retirement, people were split evenly between those in agreement and those against the idea.

One area where people were in support of government intervention was in making sure people have access to support. Two thirds said they would consider seeking advice to help make decisions, while three in five (61%) thought it would be a good idea for those who had not taken advice to seek guidance from Pension Wise.

Cameron added: “We agree that the pension freedoms introduce some risk, and we’re encouraged that two thirds of people would consider seeking advice. But any attempt to restrict the freedoms for those without an alternative source of secure income in retirement would be politically risky with our research showing such a move would divide the nation.”

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