Pensions and Lifetime Savings Association (PLSA) research shows no dash to take entire pension pots as cash though significant education challenges remain.
In Pension Freedoms: No More Normal the PLSA assessed how those able to utilise pension freedoms had done so. The sample was split between actioners (14%) who had actually made retirement income decisions, investigators (63%) who were researching options and the inactive (23%) who had yet to do anything.
Of those who had taken action only 14% had taken cash.
This runs counter to early concerns that the freedoms may encourage many retirees to take their entire pensions as cash.
Over a quarter (27%) had gone into drawdown while 37% had only taken tax free cash. According to the research 20% of those who had taken action chose to purchase an annuity which is higher than first thought. However, PLSA's head of policy and research, Jackie Wells said this number may come down to "confusion over the terms" and many might have purchased a different retirement income product.
Of those who took cash the research shows that 18% spent it all while 57% chose to save or invest some and spend some. Almost one in five (19%) saved or invested it all.
While the results suggest the majority of those taking cash were not reckless spenders the saving and investment decisions taken do raise concerns. One in five chose to put their cash into a cash ISA while a further 23% put their money into a savings account. Only 19% put their cash into a shares ISA while 8% invested in property.
Speaking at the report launch the Association of British Insurers policy director Yvonne Braun said more needed to be done to engage people with their pension savings.
"We have to engage with people more and steer them towards guidance as people need a lot of help," she says.
"Take up of Pensions wise needs to be much higher and advice needs to be made more accessible."
When asked what employers can do to help engage scheme members, PLSA's Wells acknowledged the difficulties employers face in potentially straying into offering advice.
"It is important that we look at what can be done in this area," she said. "We would like to be able to say to those who want to go further than the bland leaflets saying ‘Go to Pensions wise' that they can do that without fear of litigation."
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