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Latest News
07 Jul 2014

24% Of UK Employees Plan To Reinvest Savings After Retirement

Pension reforms announced in the UK government´s 2014 Budget, will allow those retiring with defined contribution (DC) pension schemes greater flexibility in how they manage their savings.

But what do employees actually plan to do with those savings? According to a new poll, just 7% of British employees plan to take their savings as a lump sum when they retire, whereas the vast majority would only use part of their pension pot at retirement.

The survey by Friends Life found that the average proportion of savings that respondents planned to release at retirement was 33%, with about one in four respondents willing to take at least half of their savings. A similar proportion (24%) would like to reinvest the money, meaning that the right information will be of critical importance for their future income, Employee Benefits website said. Of those, 22% plan to invest in new individual savings accounts, whereas one in five consider reinvesting in buy-to-let property. About 14% think that reinvesting in stocks and bonds would be the best option for them.

However, many people are not aware of the implications of the new rules giving them financial freedom. Some 28% of those polled admitted they found it hard to understand what the reforms meant, and had no idea if - and how - they would reinvest their pension savings.

Authors of the survey stress the importance of information for employees, as lack of either awareness or preparation could cost them heavily. Employees should be encouraged to seek guidance and investigate all available options, advises David Still, managing director retirement income at Friends Life.

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