New pension freedoms have motivated employees to plan for their retirement earlier than they otherwise would, industry research has revealed.
Over a third of employees are considering planning for retirement much sooner than expected, and for those aged between 22 and 30, the figure rises to 40 per cent.
Under the new flexible rules, those over 55 are now able to withdraw money from their pension entirely at their discretion, with a quarter of what they withdraw being tax-free.
Martin Parish, Area Director at Aon Employee Benefits urged employers to focus on ‘effective pension communications’ to help inform and educate staff about the options available to them: “Contribution requirements are a key factor here and they are aligned to the Pension Regulators guidance on workplace pension governance,” he said.
The NEST Insight 2015 research also found that 16 per cent preferred a guaranteed income – such as an annuity – and 19 per cent said they expected to use a portion of their savings as a guaranteed income whilst investing the rest. In addition, one in five said they were considering withdrawing some or all of their pension as a cash payment.
In addition, the research indicated that public attitudes towards auto-enrolment have also improved, with 77 per cent of respondents agreeing that auto-enrolment was a good idea: an increase of nearly 10 per cent since 2013.
Parish added: “The increased flexibility around pensions at retirement has certainly increased the interest in pensions across all age, gender and income groups. Anecdotal evidence has shown that people in their late 40s and early 50s tend to prefer the concept of a stable income to meet everyday costs and expenses in their retirement, but would use additional flexibility and access as appropriate.”
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