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03 Feb 2016

One in four wealthy investors shunning private pensions

New research has revealed that almost one in four wealthy investors are eschewing private pensions in favour of the flexibility of stocks and shares ISAs, the Money Facts website reports.

According to a report from The Share Centre, 24% of wealthy investors in the UK - those with a minimum of £10,000 in investments - are replacing their private pension pots with ISAs, which allow them to access their money if and when they need to.

In fact, this is a trend that appears to be growing; the Centre says that it has witnessed a year-on-year ISA inflow increase of 11%. It suggests that this is because investors want a greater degree of control over their money, so are reinvesting their pension money in these ways.

As chief executive of The Share Centre Richard Stone explains: “The pension freedoms have got investors thinking about the flexibility they want from their long-term savings vehicles, and the fact that a quarter of wealthy investors are looking at ISAs […] alone to finance their future speaks volumes about what investors want from their investment products.”

“We may be seeing the beginning of the death of the private pension,” he added.

Of course the taxable benefits of a private pension cannot be denied; but, Stone explains, many savers could now “be viewing their workplace pension as the only pension vehicle they need in their life”.

Since auto-enrolment came into force, more workers in the UK are saving for they retirement than ever before. However, due to the upcoming changes to the tax system - including a reduction in lifetime allowance, and caps on pension contributions - solely relying on a pension could become a false economy.

While a workplace pension is still essential, the article concludes, it is not surprising that a growing number of investors are now utilising ISAs as long-term savings vehicles, rather than private pension pots.

Copyright M2 Bespoke 2016

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