UK Pensions: Nearly one year on from introduction of pension freedoms, pensioners are not being as reckless as was feared with their lifetime savings

Hayley Kirton
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People's retirement funds haven't been frittered away on fast cars (Source: Getty)

People have not abused greater access to their pensions by splashing their cash on the fast life, with the new rules encouraging many to save for their retirement.

A report released today by the Pensions and Lifetime Savings Association (PLSA) showed little evidence that people had maxed out their pension pots since the pension freedoms rules came into force last April, with many people still looking to their savings to provide them a regular income throughout their retirement.

However, PLSA also warned that those who were presently able to use the freedoms, which essentially allow people to withdraw money from their pension without first purchasing an annuity, are more familiar with the pensions system than those who will follow in years to come.

"People are taking their time to try to make decisions that are right for them," said Graham Vidler, director of external affairs at PLSA. "There’s been little sign of a 'dash for cash' but we need to stay alert to new risks.

"In particular, the next group of people to use the freedoms have less experience of pensions and a greater dependence on the money in their defined contribution pensions."

Read more: How pension freedoms could have cost people £104m

A separate study released yesterday by Aegon discovered that, since the pension freedoms rules were introduced, people have boosted their pension contributions, with 18 per cent of men and 15 per cent of women paying more into their pension pots as a result of the reforms.

"Industry reforms such as auto-enrolment and pension freedoms are working, and they are already having a positive effect on the saving behaviour of women in particular, with more of them ready for the retirement they want than ever before," said Kate Smith, regulatory strategy manager at Aegon.

"But the challenges women face when planning their retirement remain complex, and it is vital that we continue to support those starting out or still on their savings journey."

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