A survey has revealed what people who earned the moniker ‘Britain’s baby boomers’ – those now aged between 55 and 74 – are looking to do with their pension, when the new reforms come into effect in April 2015.
Following the announcement by the government in last year’s Budget, individuals with a private pension will no longer have to take out an annuity – and, if they so wish, can instead withdraw all of their money.
The government insist the changes will bring more choice than ever before to how people plan and finance their income in retirement.
Yet according to the new BlackRock Investor Pulse survey (of 2,000 people aged between 25-74), 28 per cent of the so-called ‘baby boomers, those aged between 55-74, are undecided about what to do come April.
The survey suggests that 26% will opt to stay invested in their pension plan, taking regular withdrawals and using part of it to purchase an annuity.
Almost one in five (17%) will withdraw all of their pension and invest it elsewhere; 9% say they will invest it to generate an income; 8% will put it into a cash savings account; and 6% will use part of their pension to clear debt or spend it on other priorities.
Just 3% said they would use it all to treat themselves.
The survey, one of the largest of its kind to analyse the savings and investing habits of people around the world, also revealed that the 55–74 age group are some of the least prepared for their retirement. Things discovered from the survey include:
- Outside of a pension, almost two-thirds (63%) said their savings are in cash.
- Eight in 10 (81%) say that they do not know how to get the best income generating investments.
- 40% have not started to save specifically for retirement, despite two-thirds (67%) knowing the state pension will be insufficient to meet their retirement income needs.
- Almost six in 10 of the ‘baby-boomers’ (59%) are concerned that they will not live comfortably in retirement.