New Which? Guide to Help People With Pension Choices

20th March 2015

Which? is joining forces with the Association of British Insurers (ABI) to warn people not to rush into a decision they could later regret, as we calculate that the tax bill for using your pension pot to buy a Lamborghini would be enough to buy a Porsche.

With just weeks to go until the Government's pension freedoms start giving people greater flexibility on how to use their savings, Which? is launching a free guide, supported by the ABI, to help people make the most of their Pension Wise session and secure a good deal for their hard-earned savings.

It's important people take their time to consider their choices, because turning pension savings into retirement income is one of the most complex financial decisions they will ever have to make. While we think it's right people have more freedom over how they spend their savings, it's also vital they are aware of the risks of making quick decisions. For example, we have calculated that if someone really did use their pension pot to buy a Lamborghini, they could end up paying enough tax to buy a Porsche.

Our separate survey of consumers also found many are still uncertain about retirement with half (51%) saying they don't know how much they will need to live comfortably and six in ten (60%) not knowing what they need in their pension pot when they retire.

Despite seven in ten (69%) retired people saying they were confident before they retired that they would have enough to live comfortably, more than one in ten of those (11%) later found it difficult to cope on their pension and other savings.

Which? executive director, Richard Lloyd, said:"The Government's reforms will offer people welcome flexibility over what to do with their savings. But people approaching retirement aren't going to turn into financial experts overnight and so, with more options on the table, it's vital people take their time to make the new freedoms work for them.

“Our free guide offers tips to get the most out of the Pension Wise guidance service, including advice on things to consider in advance and questions to ask during your appointment."

Huw Evans, Director General Association of British Insurers said:“April 6 is the start of a pensions revolution, not a deadline to act. With greater pension freedoms and flexibility comes more responsibility to make the right choice. Don't be tempted to 'dash for the cash', but take time to consider carefully your options - especially as rising life expectancy means we can expect a longer retirement. The Government's Pension Wise service should be your first port of call to help you understand your options, and make the right retirement income decision.”

The free guide is available to download at: www.which.co.uk/pensionwise2