County pensioners resisting the urge to splash out
Shropshire pensioners are resisting the urge to splash out their saved cash even though Government ministers have loosened the purse strings, county financial experts say.
Changes to the rules on accessing pension assets, allowing unlimited amounts to be taken in one go, sparked fears of a raid on funds by over-55s preferring to spend now and worry later about the consequences.
A new survey by insurance organisations has suggested that some have been taking advantage of the chance to spend but county expert Steven Graves, a director of Newport-based Robert Nicholas Financial Advisers, said his company’s clients had been more restrained.
“I’m pleased to say there hasn’t been a dash to take big lump sums out of pension pots among our client base. Obviously it’s our job to help them understand what any move of that kind would mean for their long-term income and it’s only when they have all of the facts that people can make a properly informed decision,” he explained.
The High Street IFA specialist said pension pots could look quite tempting if people only examined the cash value.
“But what people have to understand is that now people are living longer that pot might have to last for another 20 or 30 years. Eating away at the core value now has a huge impact over the longer term because less capital earns less income and means lower regular payments. Sometimes there is a case to take money to buy that new car or have a once-in-a-lifetime holiday because we all only live once, but it should be balanced by the individual’s circumstances.”
His comments follow survey results from the Association of British Insurers (ABI) which suggested that four per cent of pension pots had seen ten per cent or more removed since the pension freedoms were introduced. The ABI has warned that the reasons for this need to be investigated to see what kind of customers they are and whether these moves were suitable for their circumstances.
Mr Graves added: “Announcing the pension freedoms the minister at the time, Steve Webb, said people would be free to buy a Lamborghini if they wanted to! While true, that wasn’t necessarily helpful – but I’m glad to say we are not seeing too many of our clients driving around in Italian sports cars!”