The research by Avacade Future Solutions reveals that further challenges range from a lack of funds to a fear of running out of money in their retirement.
More than 12 million adults in the UK are still unaware of the changes, while a staggering 37% of over 55s who are soon to retire are unsure how they will spend or invest their money.
Over one in 10 UK pension holders do not feel they have received sufficient guidance in order to make a wise decision in light of the freedoms, with 13% concerned that they will make an irrecoverable mistake. A further 47% are dissuaded from making any financial movements post-reforms due to a lack of finance, confidence and overriding fear of making irreversible mistakes with their pension.
The high levels of uncertainty and fear surrounding the April 6th reforms are reflected by one-third (33%) of pension holders who have chosen not to take out cash and sustain their current pension plan. 4.8 million people who are aware of the pension reforms do not intend to take all or part of their pension as a lump sum
However only 1% said they would use their pension to purchase a luxury item.
Additionally, confidence levels towards the reforms are considerably higher amongst future retirees. 75% of 18 - 44 year olds intend to take out a cash lump-sum when they retire.
Lee Lummis, Managing Director of Avacade, said:
“The post reforms research has reflected a nation of pension planners that are divided. With an average of 1.3 million people in the 55+ age group selecting to not touch their pension fund post the changes, and a similar number choosing to do the exact opposite, consumer sentiment is hesitant and diverse.
"As with any industry shift of this scale – especially in such early stages – the degree of knowledge about the reforms nationally is in its infancy. That said, these early findings are a vital indicator of how the industry needs to deliver in the months and years ahead.
"A staggering 47% of those who have chosen not to respond to the reforms feel scared, unknowledgeable or financially ill-prepared to benefit from the changes, and of those who are looking to take advantage of the freedoms, the course of action is equally fragmented. The overriding sentiment that supports this report is essentially a nation hungry for better standards of living in retirement, with uncertainty in how best to achieve this.
"Early insights such as those in the Pension Intentions Post Reforms report are vital steers for the companies that serve ‘Pension Britain’. Moving forward, as knowledge and the impact of the reforms gains momentum, a huge responsibility lies with information providers to ensure pension planners feel confident in the range of options available to them, so as to assist with intelligent and relevant decision making.”
