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Tuesday, October 28, 2014

A retail bonanza as oldies spend their pension savings - I think not



Research from Ipsos MORI (sorry I couldn't find its URL) forecasts how people will spend their pension funds once they get hold of them next April. Here is an article about the research from the Guardian.

The headline to the research is that 200,000 are going to withdraw all of the money and spend it. Shock and horror.

Of course what is not said is that the average pension fund in the UK is less than £30,000. So for somebody that has outstanding credit card debts or / and a mortgage, then it is a sensible thing to do. If they wait for it to pay them an annual pension they will have the princely sum of £2,500 a year paid into their bank account.

There will undoubtedly be an increase in consumer expenditure once people can control their (just say that again - control their pension savings. Unfortunately, for many people they will have no idea about the tax they will then pay, but that is a different story.

Bottom line, next April will see the 55+ spending more money than normal but I doubt it will be the bonanza that some people are expecting. Dick Stroud

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