The Office for National Statistics has released its latest overview of the UK population (1).
2019 and 2020 will see those born at the very peak of the post-war baby boom, in 1964 and 1965, reach the age of 55. And at 55 they will enter the arena of the pension freedoms – permitting them to access their private pension savings.
According to the latest data, 933,015 are set to reach age 55 in 2019. This will then peak at 942,791 in 2020. The number of people celebrating their 55th birthday each year is never again projected to repeat this high. Over the next ten years a record 9.2 million people are set to reach this milestone age.
Commenting, Alistair McQueen, Head of Savings & Retirement at Aviva said:
“Since their introduction in 2015, more than one million people have taken advantage of the pension freedoms, withdrawing more than £28 billion (2). The latest population data suggests the pension freedoms are about to witness a decade like we may never see again, as 9.2 million reach their 55th birthday by 2029.
“With this greater freedom to access finances comes much greater responsibility to make informed choices to ensure that the money lasts throughout retirement. We’d encourage people to engage with their pensions early and seek out as much information as possible before committing to a particular route.”
Here are five top tips if you are considering using your pension freedoms:
- Take your time: You could have been saving into your private pension(s) for more than 30 years. Don’t rush into making any decisions. It’s a big decision and you may not be able to change your mind.
- Understand your options: The pension freedoms typically allow you to access your private pension savings from age 55. You can usually withdraw all, some or none of your savings. Age 55 is the date from which you are eligible to access your private pension savings, but there is no need to act at that age. Indeed, the longer you wait before accessing your savings, the more you are likely to have available in later life.
- Get free help: The government recognise that deciding how to use the pension freedoms could be confusing, so they have established a free service call Pension Wise to help you understand your options. There have been more than 8 million visits to www.pensionwise.gov.uk since launch, and the service currently carries a 97.9% satisfaction score.(3)
- Avoid unnecessary tax: You can typically take 25% of your pension savings tax free, but after that, income taken from a pension is taxed the same was as any other income. The rate at which you take your pension savings will have implications for the amount of tax you may have to pay. Bigger withdrawals are likely to attract bigger tax bills, so withdraw with care and consideration.
- Shop around: You may have saved with one company for many years, but there is no need to stay with that same company when you are using your pension freedom monies. If and when withdrawing some or all of your money, shop around to consider new homes for your savings. This could make a big financial difference over the following years.
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Contains public sector information licensed under the Open Government Licence v3.0.
Notes to editors:
- For information on how Aviva is helping our people, customers and communities impacted by COVID-19 visit: www.aviva.com/covid-19-our-response/
- Aviva is a leading international savings, retirement and insurance business. We exist to be with people when it really matters, throughout their lives – to help them make the most of life. We have been taking care of people for more than 320 years, in line with our purpose of being ‘with you today, for a better tomorrow’.
- Our vision is to earn our customers’ trust as the best place to save for the future, navigate retirement and insure what matters most to them. In 2019, we paid £33.2 billion in claims and benefits on behalf of our 33.4 million customers.
- We operate through five business divisions: Investments, Savings & Retirement; UK Life; General Insurance; Europe Life; and Asia Life; and focus on three strategic priorities: deliver great customer outcomes, excel at the fundamentals and invest in sustainable growth.
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