Savers outline fears over pension planning

Updated

Many pension savers fear being hit with a large tax bill on their retirement pot, making a mistake with their retirement planning, or running out of cash in older age, a survey has found.

A study from MetLife among more than 1,000 adults currently in employment found tax risks are one of the biggest worries people have about their retirement.

New freedoms introduced in April 2015 mean that instead of using their pension pot to buy a guaranteed retirement income called an annuity, people aged 55 and over now have a wider range of choices when using their money. But generally, while the first 25% of a pension pot is tax-free, the remainder is subject to tax.

MetLife's study found nearly six out of 10 (58%) savers are concerned they will pay more tax on their pot than they need to.

Meanwhile, 42% of people fear making mistakes with their retirement planning, while 39% feel that running out of money in retirement is a major concern, now that they have more flexibility.

MetLife's research also found that around 11% of savers plan to take all their pension fund in cash.

The Government-backed Pension Wise Service is available to provide guidance to people taking up the pension freedoms.

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