Employees planning for retirement sooner due to pensions freedoms

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Over a third (34%) of employees will think about planning for retirement sooner as a result of new freedoms, according to research by NEST.

This rises to 40% among people aged 22 to 30. New pension rules allow people over 55 to withdraw money from their pension pot when they choose, and 25% of what they withdraw will be tax-free.

According to NEST Insight 2015, 16% of respondents wanted only a guaranteed income (for example, an annuity). Around one in five (19%) said they would use some of their savings as guaranteed income, and would invest the rest in a way that creates additional revenue.

A further one in five (20%) indicated that they would take some (13%) or all (7%) of their pension pot as a cash payment.

Commenting on the report, a spokesman from Hargreaves Lansdown said the new freedoms “have reinvigorated interest in retirement planning".

“We wouldn’t go so far as to say pensions are sexy now but they’ve certainly become more attractive,” they added.

The NEST research also found that auto-enrolment is perceived as a good thing by the majority of respondents. Over three-quarters (77%) thought it was a good idea, compared to 68% in 2013.

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