Less than one in 10 will buy an annuity

22 April 2014

Just 7% of people will still buy an annuity once new rules giving greater freedom over what people can do with their pension in retirement are introduced next year.

The figures, from an exclusive Moneywise.co.uk poll of 1,185 people, indicate that the majority of people (30%) would take their pension as cash when they retire, saving some and spending the rest.

Just over one in five (22%) will leave their pension fully invested for income, while 17% said they would consider a mix of all those options.

In his March Budget, chancellor George Osborne announced a revolutionary raft of measures designed to hand more control to pensioners. From April 2015, people who have saved into a money purchase or defined contribution pension scheme will no longer be forced to buy an annuity.

Instead, they will be able to take the whole lot as cash (subject to a tax charge equivalent to their marginal rate of tax), leave it invested, or purchase an annuity.

The government also announced that everyone who retires with a DC pension will be offered "free and impartial" face-to-face guidance at the point of retirement.

The latter policy could be crucial, as almost a quarter of people (24%) said they haven't a clue what they will do with their pension when they retire.

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