This is the third report in a series exploring how pension freedoms are affecting consumers in the context of their broader lives. Citizens Advice's report finds that:
- Pension freedoms have been popular. Consumers are happy to have control over their finances and are making their savings work better for their circumstances. In total, 35% of consumers who have used the freedoms say that they have directly improved their own retirement prospects, with many more saying they welcome the change despite not using it themselves. Just one in twenty (5%) consumers say the freedoms have harmed their prospects.
- The proportion who plan to use their pensions for luxury spending (22%) is not disproportionately higher than the proportion who expect to spend on investments (18%) or paying off debts (16%).
- Consumers are facing unexpected tax and welfare losses. One in eight (12%) consumers had unexpected income effects related to tax or welfare payments (this does not include others who were expecting such effects).
- Many consumers are transferring their savings into bank accounts. This is the joint most popular option (29% of all consumers) and is taken by a third (32%) of those with pensions worth over £100,000. This may become increasingly common following uncertainty about financial markets and annuity rates following Brexit.
- Most consumers have not got a plan to fund care costs, even after they have accessed their pensions. Our research shows that more than three in five (61%) have not got any plan of how they would fund their care costs. But today around half of older adults have care needs.