In the wake of the 2014 UK Budget, consumers are feeling more confident about their financial decisions, according to new research.
Over half of consumers (52%) surveyed by Aviva thought that, given that the pension changes announced will give people more freedom, they can be trusted to spend their retirement savings wisely. And 62% of yet-to-retire Brits said they thought giving people more choice and flexibility in how they take their retirement savings is a good idea.
It was announced earlier 2014 that from April 2015 people aged over 55 will be able to take their defined contribution pension savings as they wish, subject to their marginal rate of income tax.
Sixty-three percent of those questioned supported having better control over how to spend their finances; 67% welcomed greater freedom to do what they want with their money. Despite this support for the changes announced by George Osborne, 61% also said that they would need to exercise more restraint over the coming years to avoid spending money earmarked for their living costs.
Twenty-two percent felt that they did not have enough retirement income to live on for the rest of their lives, and 42% said that it would last while they are still active. But 34% thought that their retirement savings will last for the whole of their retirement. In addition, 27% say that they do not worry about their finances, and 31% said they live just for today.
For guidance, 45% said they would turn to their family and friends for help with their pension savings, compared to pension providers (33%), independent financial advisers (28%) and the Pensions Advisory Service (24%).
More than a quarter of people (28%) said that they had the right information to make decisions about retirement, 41% said they had some information but would value further help, and 30% admitted that they are lacking in understanding. The closer they were to retirement was also an indicator of how well informed people felt about the changes: 72% of those due to retire in the next year felt confident about their level of knowledge.
Clive Bolton, Aviva’s Managing Director commented on the findings:
“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. Retirement solutions such as pensions, annuities, income drawdown and equity release will continue to have a role to play in people’s retirement plans.”