The planned changes in April 2015 - that will allow people to take money out of their pension savings - is the most radical change to private pensions in a generation.
However, a new report by Age UK warns that changes coming in April that will allow people to take money from their pension savings could leave significant numbers of older people running out of money in retirement. The report shows how someone on a £29,000 pension pot and withdrawing £3,000 a year (non-index linked) from the age of 65 will run out of money at 75.
The report’s calculations are based on a pension pot well above the typical pension savings and 3% returns on the remaining savings.
Even modest annual withdrawals will mean a significant number of pensioners may have to exist for several years at the end of their lives without any income from their private pensions.
For many this will mean life will become financially much tougher with some struggling to make ends meet.
Caroline Abrahams, Charity Director of Age UK, said: “We welcome people having more flexibility in how to use their pension savings. But that makes it even more important that we fully understand the implications and consequences of our financial decisions and can trust the financial services in which we have invested. That’s why we believe that there must be additional checks and balances introduced to the pensions legislation in addition to the impartial guidance that will be available”.