Over one in four (27 per cent) of British adults made changes to their pension investments based on speculation about the Budget, according to research.
Polling commissioned by the Get Britain Pension Ready found an overwhelming majority (75 per cent) of those who made changes say they would have done things differently if they knew what they know now.
The lead-up to October’s Budget was filled with speculation that there would be changes that would affect pensions, including that there could be a cut to the amount of tax-free cash people could withdraw from their retirement savings, or that there would be a reduction on tax relief from pension contributions.
Though there were some changes to pensions at the Budget – including the announcement of a plan to subject them to inheritance tax – many of the policies speculated about were never implemented.
Major pension providers have reported that more people than usual were withdrawing cash from their pensions in the run-up to the Budget, and some were putting larger amounts into their pensions.
The polling, conducted in November and involving 2,000 adults, found only 29 per cent trusted in the stability of current pension policies more following the Budget.
Sarah Lloyd, director at Annuity Ready, which is part of the campaign, said: “Our findings paint a worrying picture of how people can feel prompted to make significant decisions about their retirement savings in the face of uncertainty.
“What’s concerning is that these aren’t just small changes – we’re seeing people withdraw money early or reduce their pension contributions based on speculation rather than facts, which has real-world consequences.
“When official announcements are made, we must consider that many people don’t always fully understand the policy changes being reported. This creates a perfect storm where rushed decisions are made from a place of anxiety rather than informed choice. Looking ahead, long-term confidence in pension safeguards appears equally fragile. People want clarity and security that they can count on, because pensions and the decisions made have long-term implications for everyone.
This week, i has reported how people who put in requests to withdraw tax-free cash from their pensions out of fear of changes in October’s Budget are now asking to reverse their decision.
Pensioners are allowed to take 25 per cent of their retirement savings, up to the value of £268,275, tax-free as a lump sum before taking the rest as taxed income. In the lead-up to last month’s Budget, there were calls for the Chancellor to reduce the limit to £100,000 from multiple think-tanks including the Institute for Fiscal Studies.
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