You are here: Home - Retirement - Retirement planning - News -

A million people turn 55 this year triggering pension freedoms

Written by:
A record number of people will turn 55 this year, giving them unfettered access to their life savings. But with the coronavirus market volatility, savers need to think carefully before making withdrawals.

Estimates suggest more than 940,000 people will turn 55 in 2020, meaning they will be able to access their defined contribution pension pot flexibly.

As such, 2020 is the ‘peak year’ for people reaching the pension freedoms age, according to analysis by Aegon.

However, it added that the numbers reaching 55 will also be higher than usual over the next six years, consistently above 900,000.

Pension freedoms were introduced in 2015, and since then, more than £35bn has been withdrawn by 1.4 million individuals.

As money can be accessed but a portion can still remain in the stock market, the coronavirus volatility poses new challenges for people reaching the pension freedoms milestone.

Steven Cameron, pensions director at Aegon, said: “Coronavirus is affecting all aspects of our lives, including wealth as well as health, employment opportunities and attitudes towards retirement. Some may find themselves without other sources of income and be tempted to start taking a retirement income from 55.

“Others will want or need to continue working to build up sufficient funds to have the retirement they aspire to. The deadly impact of the virus on many thousands may also change people’s attitudes towards choosing between the financial guarantee for life of an annuity and the flexibility of income drawdown under the pension freedoms.”

“The pension freedoms have proven so popular because of the enormous flexibility they offer on how much income to take when. But these come with risks of remaining invested in the stock market which have been brought into stark relief as a result of the coronavirus and resulting market volatility.

“In the current climate more than ever, we strongly encourage individuals, whether considering or currently drawing an income, to seek financial advice before making important financial decisions that could have a lifelong impact.”

See’s Questions you should ask before accessing your pension for more information.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Nationwide to increase instant access regular saver to 5%

Nationwide will increase the interest rate on its Start to Save 2 account to 5% in December.
Nationwide to increase instant access regular saver to 5%

How to get 5% interest without tying up your savings for years

You don't have to lock your money away to get an above-average return on your savings.
How to get 5% interest without tying up your savings for years

Borrowers warned that spray foam could make homes ‘unmortgageable’

More homeowners are installing spray foam insulation to keep bills down as the price of energy soars, but many...
Borrowers warned that spray foam could make homes 'unmortgageable'

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week