The number of new people reaching pension freedoms age will reach a peak in 2020, new analysis by Aegon has revealed.
According to the latest Office for National Statistics (ONS) population estimates, the pension provider suggested the next six years will also see consistently high numbers of people turning 55, should the minimum pension age stay at 55 for the “foreseeable future”.
Estimates show 941,00 people will be more people turning 55 in 2020 – more individuals than any other age in the UK. Aegon’s research then highlighted that population estimates over the following six years show that those those approaching the age of 55 will consistently total above 900,000.
The introduction of the pension freedoms in 2015 means individuals with defined contribution pensions can now access their pension savings with complete flexibility from the age of 55, and start to take a retirement income. Under income drawdown, they can remain invested in the stock market offering the opportunity to continue to experience investment growth into retirement.
Since its introduction in 2015, more than £35bn has been withdrawn by 1.4 million individuals through the pension freedoms, according to HMRC data.
“We’ve already passed the fifth anniversary of the pension freedoms and they’ve proved hugely popular,” Aegon pensions director, Steven Cameron, commented.
“The 2020s could see a further spike in interest as estimates show we are entering a record period for the number of people reaching 55, the current minimum age for accessing freedoms, peaking in 2020 and remaining high into the mid-2020s.
“However, the coronavirus is affecting all aspects of our lives, including wealth as well as health, employment opportunities and attitudes towards retirement. Some may find themselves without other sources of income and be tempted to start taking a retirement income from 55.
“Others will want or need to continue working to build up sufficient funds to have the retirement they aspire to. The deadly impact of the virus on many thousands may also change people’s attitudes towards choosing between the financial guarantee for life of an annuity and the flexibility of income drawdown under the pension freedoms.”
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