Pension freedoms have created ‘demob fever’ among over-55s, causing many significantly change their retirement plans, according to Retirement Advantage.
The retirement income provider has released results from a survey showing that one in five people have completely changed their retirement plans because of pension freedoms.
Of those, 44 per cent plan to retire earlier, with 21 per cent saying they want to stop working between one and three years before retirement age and a further 23 per cent planning to retire at least four years earlier.
The company has described this behaviour as ‘demob fever’, citing figures to back up its survey from the Financial Conduct Authority, which show that 72 per cent of consumers who accessed their pots between April 2015 and September 2017 did so before the age of 65.
Retirement Advantage pensions technical director Andrew Tully, said: “The increased awareness around pension flexibility has certainly made people sit up and rethink their retirement, with a significant number changing their plans as a result.”
“Official data shows most pensions are now accessed before state pension age, which demonstrates what a game changer the pension freedoms have been. The regulator has recognised the need to alert people to the fact that your 55th birthday should not necessarily be a starting signal to begin accessing your pension.”
He added that whatever decisions people make on the back of flexibility around their pension choices, a critical first step they should take is to consult an IFA: “An adviser will be best equipped to ensure that pension freedom ‘demob fever’ won’t cause problems further into retirement.”
Retirement Advantage also found that 28 per cent of respondents are now planning to retire later: 13 per cent by between one and three years later; while 16 per cent said they wanted to keep working for at least four more years.
Nearly a third of people changing their plans are also looking to work part-time in retirement. The survey data shows a clear difference between men and women who have changed their plans. While 41 per cent of women over 50 anticipate working part-time in retirement, only 20 per cent of men plan to do so.