In a poll assessing attitudes to the annuity market and the changes to pensions outlined in last month’s Budget, 75% of the 1000 defined contribution scheme members surveyed said they had little appetite to buy annuities now that restrictions had been lifted.
Of that group, 32% said they would take most of their pension pot as cash and some to buy an annuity, 12% said they would take all of their pension pot as cash, while 31% said they would keep control of their money and draw an income from the pot each year.
Hymans Robertson partner Chris Noon said: ‘The chancellor’s Budget changes aren’t cold yet, but the mindset of savers is clearly already changing. Greater trust and flexibility has been welcomed and annuities are set to be a product for the minority, not masses.
‘The confidence savers are showing on managing their own pot is positive. The reality is, however, that retirees are going to need tools to manage their pots over a 30-year period in retirement. Systems exist at present to help people build the right pot for retirement – what’s missing is the tool to help people spend at the right pace.’
The survey also found that older scheme members took a more negative view of the value of an annuity than their younger peers. Around, 34% of scheme members aged over 51 said that annuities were ‘not flexible enough for their retirement plans’, compared to 20% of people under 51. Likewise, 38% of older respondents labelled annuities as ‘poor value for their savings’, compared to 21% of younger people.
Men expressed themselves as more confident managing their own pots (64%) as are those on higher incomes (70% of people earning over £34,000). Women are less confident (56%), as well as those on lower incomes (56% of those earning less than £21,000).
Overall, over half of DC scheme members (61%) polled said they were confident about self-managing the money built up in their pension pots throughout their retirement, compared to just 19% who aren’t.