A study of the website’s user base - who have average private pension assets of £146,000 - has found over half (54%) have still not received any communication from their provider about the new pensions freedoms to come into force this month. In addition, only 34% of them have proactively heard from their providers and 8% from their pension plan advisers about charges for deducting funds early.
Despite this, 68% of pre-retirees are aware of these charges and, as a result, only 28% plan to withdraw funds before they reach 65. Even then, the vast majority at 90% are only going to withdraw a maximum of 25% of their pension fund, which they can receive tax-free.
Proactive research by pre-retirees has resulted in 78% of them being either fully or partly aware of the difference between capped- and flexi-drawdown. Therefore, they are aware that the maximum amount they can pay into a pension fund may be reduced if they withdraw more than a certain amount each year.
When it comes to the abolition of the 55% ‘death tax’ on pension funds, nearly two-thirds (65%) are aware of the difference in the potential tax treatment on death between pension and ISA funds. A quarter (24%) are aware of a difference but don’t know what it is, while 11% think the tax treatment on death is the same for both.
The majority of the userbase at 84% believe the new pensions freedoms are a ‘good idea’. Despite this, 72% do not plan to take advantage of the freedoms and are not concerned about the lowering of the Lifetime Allowance.
Unsurprisingly, nine-tenths do not have plans to buy an annuity with the remainder of their fund. A similar proportion of the userbase (91%) - who are aged 58 on average and plan to retire partially at 61 - plan to supplement their income by working part-time in retirement.
Mark Soper, an IFA and co-founder of RetireEasy.co.uk, said:
"It is clear that pre-retirees are not as confused and worried about the pensions freedoms as many would have us believe. They are a clued-up, proactive demographic that knows what they want - and can - get from their pension.
"Saying that, it is obvious pension providers and advisers need to do more if they want to engage with this relatively wealthy demographic. It is not just about advising them on how to react to the new freedoms, but what they can do with their substantial pension and investment assets over the long-term. There is a wealth of future business here if institutions will only reach out responsibly and honestly with their customers."
