Pension freedom - how it is working one year on

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Many of this year’s retirees feel more positive about their retirement as a result of the pension freedoms implemented a year ago according to new research.

However this is tinged with a sense of caution with pensioners adopting a wait-and-see approach before deciding whether to take advantage of the rule changes.

The main finidings of the Prudential survey were: The changes to pension rules have boosted the retirement confidence of more than one in three (34 per cent) of this year’s retirees; When asked what the positive aspects of the rule changes are 44 per cent mentioned the greater degree of flexibility they now have over access to their pension savings; 59 per cent say that the changes haven’t yet led them to alter their plans for taking an income from their pension savings; Nearly half (49 per cent) say the pension freedoms haven’t had an impact on their attitude to retirement, as they are not sure the rule changes will last; Only one in five (22 per cent) have changed their plan to take a retirement income from their pension savings in light of the rule changes; People planning to retire with defined contribution pensions are almost twice as likely to have changed their plans; Over a third (36 per cent) of those with pensions planning to retire in 2016 will exploit the new freedoms and take some or all of their pension savings as a cash lump sum; Of those who will take cash from their pension, more than four in 10 (43 per cent) plan to take out more than their 25 per cent tax-free amount.

This year’s retirees face a further change to the pensions landscape with the introduction of the new ‘flat-rate’ State Pension2, however, nearly a quarter (24 per cent) of the class of 2016 saying that they don’t know about the change.