Pensioners could run out of money by age 75 if they choose to withdraw cash from their pension savings rather than buy an annuity or use income drawdown, the charity Age UK has said.
Age UK’s calculations are based on a 65 year-old with total pension savings of £29,000 and a 3% annual rate of return on the remaining savings. If £3,000 was withdrawn each year they would run out of cash by age 75.
Taking out £2,000 a year would mean that pension savings would run out at age 81.
In December Age UK published a list of 8 recommendations that will help retirees to make informed decisions about what they do with their retirement savings. The 8-point plan calls for:
- more tools to help people manage their money in retirement
- an integrated system of support for private pensions, state pensions and benefits
- new standards on retirement products to control charges and ensure strong governance of pension schemes
- regular government reviews of the pension reforms.
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.”