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Retirees embracing life in new ways

In fact, a recent piece of research found that nearly half of all new retirees (45.9%) actually have greater outgoings in the two years immediately following retirement than they did before stopping work. Even six years later 33.4% are still spending more than they were during their working years. Interestingly, this is a trend that is not only confined to individuals of high net worth; it seems that no matter how much money you have, your chances of increased retirement spending are roughly the same.

As those expats with a QROPS in France and elsewhere can probably attest, it may be that QROPS pensions are one of the reasons that so many retirees feel comfortable enough to increase spending once they have given up work; flexible pensions give people freedom and allow for the kind of outlays – whether second homes, campervans or holidays – that are synonymous with a long and enjoyable retirement.

In fact, around one third of people between 55 and 75 say that they hope to be able to withdraw between £2,000 and £5,000 so that they can take an extended trip away, while 20% of pensioners say that they would like to withdraw from their pension so that they can make improvements or adaptations to the home.

Perhaps the biggest indicator of the shift in attitudes to retirement is to be found in the fact that many plan to access their pensions to start a business or move into a consultancy role. Finally, with younger generations struggling to buy a home, many pension aged people, including expats in France, are using their QROPS to help their children and grandchildren buy homes in an otherwise inaccessible property market.

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

Other News

NEWS WRAP – 2019 Was the Year of the Bulk Pension Transfer

Pension FundsThe value of defined benefit pension scheme transfers in 2018 was an all time-high of £24 billion.

In 2019 the value of pension scheme transfers, according to Willis Towers Watson (WTW)*, is likely to be around £40 billion, which represents a substantial increase and a further record breaking amount.

The figures describe a market in which final salary pension schemes are increasingly transferred in favour of the opportunities and returns to be found in alternative products and investments.

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Why are our pensions in crisis?

Official figures have revealed that pension funds have plummeted a further £25 million into the red. The fall in bond yields – on which pension funds rely – has increased the pressure on the pots available to support final salary scheme pay-outs. At the end of May, the pension backstop PPF (Pension Protection Fund) revealed that the roughly five and a half thousand pension schemes it monitors have a combined deficit of nearly £295 billion. This is almost £25.5 billion worse than a month earlier.

Fears for the robustness of pension pots have been highlighted by the widely reported BHS deficit.  They come as a separate study reveals some of Britain’s biggest companies are paying shareholders a dividend bonanza despite huge deficits of their own. The Pensions Regulator have issued a similar warning in the past, saying: ‘It is important that employers treat their pension scheme fairly. We expect trustees to question employers’ dividend policies where debt recovery contributions are constrained.’ 

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