Pension freedoms have already changed the way thousands of over 55s are managing their finances, according to new research.
A study by provider BlackRock has revealed 80% of retirement savers are taking all their pension savings as cash and £1 in every £4 invested is going towards a future drawdown pension product.
This represents a massive change in behaviour for retirement savers since flexible pension freedoms were introduced in April, 2015.
Already, the firm says more than 1,150 savers have drawn down £13.4 million since April 6.
Around a fifth took an uncrystallised lump sum and two-thirds took all the cash from small pot pensions worth £10,000 or less.
Free pension advice
Some savers are still relying on guaranteed retirement incomes from an annuity – with 14% opting for the move.
Savers are also seeking advice before making financial decisions about their pension cash.
The survey found 34% of savers are speaking to IFAs, 60% spoke to the new, free Pension Wise service and 20% spokes to both.
Paul Bucksey, head of BlackRock’s UK Defined Contribution business, said: “The signs are that the pension landscape is already changing following the introduction of pension reforms in April.
“People are taking more control of their money and using the new rules to access their savings.
“We are helping as much as we can by scrapping exit charges and arranging drawdown accounts for savers who want to keep some of their money invested while taking some to spend.”
He also explained that new investment products were attracting interest from savers.
Drawdown attractions
The firm has more than 30 investors with drawdown pensions averaging a value of almost £140,000 that are attracting 25% of all pension investment.
“These are a new alternative to annuities,” said Bucksey. “The trend is people are changing the way they look after their pension finances and are looking for flexible options. This is no surprise, nor is the switch to drawdown from annuities.
“These new products allow them to draw cash without penalties whenever they want while leaving the rest of their fund invested and growing.”
BlackRock is one of Britain’s largest retirement finance providers managing more than £315 billion of assets.
The firm also administrates funds for more than 300,000 retirement savers in 300 workplace pension schemes.
