The pension reforms announced in last month's Budget have been largely welcomed by consumers, research from Aviva has revealed, with 62% of those surveyed thinking that giving people more choice and flexibility over their retirement income is a good idea.
There were fears that the reforms, which effectively give retirees more flexibility over how they can access (and spend) their pension pot, could lead to people squandering their savings, but happily this doesn't seem to be too much of an issue – 52% think people can be trusted to spend their savings wisely, while 61% accept the fact that greater restraint will be needed.
However, this doesn't mean that financial advice won't be necessary. If anything this greater level of freedom means it'll be even more important to seek suitable guidance, thereby ensuring you won't run out of money in retirement – a key concern for 22% of those surveyed who don't think their savings will last.
It seems that the majority of people will still do the sensible thing and seek appropriate advice to help make their money go further, with 41% saying that although they have some knowledge they'd benefit from further help and 30% admitting they're lacking in their understanding.
The changes also highlight the need to have a range of suitable retirement income solutions available to suit individual circumstances. Everyone will have different ideas about how to secure an income and will want a flexible solution to meet their lifestyle while ensuring they'll have a comfortable retirement for the duration, as Clive Bolton, Aviva's managing director of retirement solutions, said:
"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. [However] 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.
"Having access to a range of robust solutions that suit different needs will be important. Retirement solutions such as pensions, annuities, income drawdown and equity release will continue to have a role to play in people's retirement plans."
Support will continue to be essential and for many the security of having a guaranteed income will still be preferable, and that means the likes of annuities haven't had their day just yet. Although there are estimates that the annuities market could decline by as much as 75%, according to PwC, the fact that the biggest concern for pre-retirees is running out of money means this product should still be considered.
Make sure to get the advice you need, either through an independent adviser, your pension provider or using the likes of our no-obligation annuities service, and you can be even more confident over the pension reforms and can make your pot go further.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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