‘Confused’ pension savers plead for no more changes
03 April 2017
- Two years after launch, two out of three over-55s are finding the pension freedoms’ rules confusing and three out of four want no more changes
- Some savers fear the State Pension will be cut or devalued, and that pension tax relief will be reduced
- But tax breaks for annual reviews with a financial adviser would help boost savings
On the second anniversary of the pension freedom reforms, retirement savers say they are confused by the rules and want no more changes, according to new independent research1 from Prudential.
Two out of three over-55s (67 per cent) – the age from which retirement savers can utilise the new rules – say they are confused by the reforms launched in April 2015. More than three-quarters (77 per cent) want an end to any further changes to pension rules, and more than four out of ten (42%) say the continual changes to pensions has made them switch off from the topic.
Government figures2 demonstrate the cost of this confusion for retirement savers as tax bills related to the pensions freedoms are now greater than anticipated. It was initially estimated that the changes would mean a total of £900 million being paid in both tax years 2015-16 and 2016. In fact, a total of £2.6 billion in tax is now expected to be paid.
The new freedoms are having an impact in other ways. Nearly one in ten (9 per cent) over-55s say they have made changes to their retirement plans as a result of the reforms. Interest in receiving financial advice has been increasing with a fifth of retirement savers (21 per cent) saying they are taking financial advice, while a further 9 per cent either planning to or have done so for the first time.