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‘Silver pound’ to fuel UK recovery – report

Kit Klarenberg
Written By:
Kit Klarenberg
Posted:
Updated:
17/08/2015

The new pension freedoms have made over-55s Britain’s most cash-rich consumers, according to a Zopa survey.

The peer-to-peer lender’s findings found that of retirees who have a private pension, 31 per cent have already used their newfound freedom to cash in some or all of it, while a further six per cent plan to do so.

Some 10 per cent have cashed in the maximum tax-free lump sum of 25 per cent, with the average withdrawal totaling£36,500.

Retirees taking advantage of the freedoms could be the driving force behind Britain’s economic recovery, Zopa said.

Significantly, much of this money looks set to be used on consumer spending. Just under half (49 per cent) of over-55s said they don’t struggle to find money to fund lifestyle purchases, compared to 24 per cent of 18-34s and 27 per cent of 35-54s.

They also have fewer financial obligations, such as mortgage repayments or rent.  Older age groups also spend a higher proportion of their disposable income on cars, home improvements, holidays and charitable donations than others.

Increasing their level of disposable income was the most common reason for having cashed in a pension (30 per cent) among those who have done so, closely followed by finding more money with which to travel (27 per cent) or undertake home improvements (18 per cent).

In contrast, only 11 per cent had done so to pay off their mortgage. Those aged 65-69 were found to be more cash-rich than any other age group, seeing 27 per cent of their income as ‘disposable’.

Giles Andrews, co-founder and CEO of Zopa, said: “The silver pound has never been stronger. 57 per cent of the £1bn lent by Zopa over the past decade has come from over-55s, a clear sign that P2P is fast becoming a mainstream for people looking for income or to grow their pension pot. Savvy consumers in this age group have greater freedom to use their disposable income with many looking for a reliable, predictable and low risk return to generate an income from their pension funds.”

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