CHRISTINE DAWSON, 58
Part-time classroom assistant
Christine Dawson is a part-time classroom assistant from Glasgow. She has saved into pensions for 25 years and now has a £50,000 pot. The pension reforms have made her rethink what she’ll do with that money. “I’d like to enjoy the money as I don’t know what’s ahead,” she said. “I’d like to spend some of it on home improvements, a holiday or a new car.”
Dawson thinks she is likely to take more than the 25% tax-free lump sum and may also use some of the money to help her 23-year-old daughter, Lynsey, to buy a flat. She plans to work for another four or five years, but thinks she will take some of her pension before then. “I have some other money invested in Isas and shares, so I have that to fall back on. Now that I can take my pension out, I think I will.”
NEIL ROBINS, 54
Chartered accountant
Neil Robins doesn’t like “being dictated to” when it comes to money and welcomes the flexibility that the pensions reforms will bring. He plans to start accessing his pension pot as soon as he turns 55 in March next year and wants to spend some of the money on property. But Robins is not planning to invest directly in bricks and mortar; instead, he plans to put a considerable sum in The House Crowd, a crowdfunding business that invests money from groups of people into various properties. “I don’t have the funds to do buy-to-let directly, but this allows me to invest in property,” he says. Robins, a chartered accountant, has a healthy pension pot of £250,000 and will initially take out around a quarter of it. Is he worried that he might run out of money by bypassing annuities? “No. The thought of being forced to purchase an annuity is very unattractive,” he says.
SARAH MOULD, 58
Software developer
Sarah Mould a software developer from Norwich, is very practical about her life expectancy. She is 58 but says she is “not too healthy” and doesn’t expect to live beyond 80. As a result, the pension reforms have been welcome news as she says that she is now more likely to forgo annuities and instead cash in on her pension. “I have carefully paid into pensions all my life and now feel that they are absolutely worthless,” she says.
“Like many people, I’m house-rich and cash-poor, so I am probably going to withdraw at least a quarter of my pension money, possibly more.”
People like Mould, who describe themselves as “competent” when it comes to dealing with relatively complex financial decisions, are likely to provide a boon to the advice industry.
“If I had been forced to take an annuity, I probably wouldn’t have taken advice, but now I am going to have to think about where to take that [advice] and how much to pay,” she says.