Profile Pensions says that most people aiming to take cash from their plan (70%) want to take the 25% tax free pensions lump sum as soon as they are able to.
The firm issues the client research figures to mark the 5th anniversary of the Pension Freedoms. Data from clients revealed that five years on from the arrival of the Pension Freedoms in 2015, one in three clients were planning to take advantage of the changes.
Profile looked at 2,700 defined contribution pensions its staff have reviewed since October.
It found that:
• A third (33%) planned to take a lump sum of some kind from their pension
• Of those planning to take cash, 70% aimed to take out the full 25% tax free allowance
• However, 94% of people with defined contribution pensions have at least one pension plan that does not offer flexible access
Michelle Gribbin, chief investment officer at Profile Pensions, said it was good to see that many people were planning to take advantage of flexible access to their pensions.
She said: “The fact that the majority plan to take out the exact 25% also indicates that there’s a good level of understanding around the benefits of utilising their tax-free limit.
“In the current climate, many people will be under greater financial pressure than they might have expected to be. Some will be planning to draw on all sorts of rainy-day funds and of course, where suitable, a pension could be one of these options. This is a good example of where being in a flexible pension is crucial. “
However, she said it was important that people did not assume they already had the ability to take a cash lump sum as many plans still restricted access. This was because they have old style pensions that did not benefit from the 2015 regulations, she said.
The company provides advice to consumers to move their pension to more flexible arrangements where suitable.