A spending boom is likely to be triggered following a relaxation of the rules around how much money people can take out of their pensions, says leading actuary Hymans Robertson.
Under plans introduced by the Chancellor, George Osborne, people will have the legal right to access their pensions when they turn 55 rather than having to buy an annuity. Pension holders will be able to take out and spend as much money as they want.
It’s forecasted that up to £5bn will be taken out of pension funds after April this year. And Hymans Robertson estimate that £3bn of this will be spent on home improvement, such as new kitchens and conservatories, as well as on cars – boosting the UK’s total spending by 0.6% in 2015.
Adam Boulder, from Insurers Legal & General, said: “For many people, their pension pots will be, perhaps, £20,000 to £40,000. If they try to get an income out of that, it will only buy the very smallest of annuity. Instead they could spend the money on making a real difference to their lifestyles. They may fancy a new conservatory on the back of the house, or be desperate for a new kitchen, or the car may be on its last legs.”
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