Pension savers not ‘too quick on drawdown’ – Hargreaves Lansdown

Only 55% of pension savers entering drawdown since 2014 have taken income, with 45% simply taking their tax-free cash, new research from Hargreaves Lansdown revealed.

The figures, taken from analysis of DIY pension savers entering drawdown since the start of 2014, also revealed that of those drawing an income, only 40% had taken it straight away.

Hargreaves Lansdown suggested that anyone just taking the lump sum was ‘still trying to build’ their pension, but as soon as someone comes to draw income, issues of how much they draw and how long they’ll live become ‘important.’

The research found that of savers who put off taking income, 40% have waited at least six months, and another 24% have waited at least a year.

“The swift introduction of pension freedom left many braced for a drawdown shaped catastrophe – taking too much income, too quickly,” Hargreaves Lansdown senior analyst, Nathan Long, commented. “But our research shows that most people aren’t being too quick on the drawdown.

“Instead, they’re separating the decision to start drawing income from taking tax free cash, which is a very sensible approach.

“Those that opt for income are taking their time to settle on the amount of income they draw, and are using the new flexible rules to mould their pension to fit their circumstances as they gradually transition into retirement – only around one in 10 people leave work in the year when they reach State Pension Age.

“The evolution of the market and the regulation that oversees it needs to help consumers get timely, helpful, personalised information so they can make the decisions that are right for them.”

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