One in ten will ‘cash in their entire pension savings’
20 July 2018
- Prudential’s Class of 2018 study shows that 10 per cent) retiring this year plan to take all their pension savings as a lump sum
- Up to 20 per cent) will risk unnecessary tax bills by taking out more than their tax-free allowance as a lump sum
- More than one in three (34 per cent) are using the lump sums to fund holidays
Around one in 10 (10 per cent) planning to retire this year expect to withdraw their entire pension savings as one lump sum, reveals new research from Prudential’s Class of 2018, risking a potential tax bill shock and their future retirement income.
The findings are part of Prudential’s unique annual research into the financial plans and aspirations of people planning to retire in the year ahead – now in its 11th year – and shows in total that one in five (20 per cent) retiring this year will risk avoidable tax bills by taking out more than the tax-free 25 per cent limit on withdrawals.
However, they are not necessarily spending all the cash – the study found the main reason given by those taking all their fund in one go was to invest in other areas such as property, a saving accounts or an investment fund (71 per cent). And interestingly research shows around two thirds (66 per cent) of people are planning on retiring early.
Since the launch of pension freedom reforms in April 2015, more than 1.1 million people aged 55-plus have withdrawn around £15.744 billion in flexible payments.
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