Today marks the second anniversary of the introduction of the so-called 'pension freedom' reforms that, in just a couple of years, have fundamentally changed the UK's retirement landscape.
The measures, first unveiled to great surprise by then-Chancellor George Osborne (pictured) in his 2014 Budget, have resulted in a heightened interest in pensions among consumers and a tax windfall for the government, while proving a significant blow to annuity providers, with several dropping out of the market altogether.
To mark the occasion, Professional Adviser has pulled together the most interesting facts and figures to have emerged on the subject over the past two years.
According to the latest statistics from HM Revenue & Customs, more than £9.2bn has been flexibly accessed by savers since the introduction of pension freedom in April 2015.
In excess of 1.5 million payments have been made as a result of the policy, with 162,000 people accessing £1.56bn flexibly in the final quarter of 2016 alone.
Economic secretary to the Treasury Simon Kirby said: "These figures show people continue to take advantage of the choice on offer - choices only made available since the government's landmark pension freedoms were introduced in April 2015."
Research by EValue has shown the popularity of pension freedom has dropped slightly over its short lifetime. In April 2015, around 55% of eligible consumers sought a flexible income, but in March 2017, this figure dropped to 48%.
EValue founder and strategy director Bruce Moss put the dip down to the market environment, adding: "We should not be surprised if guaranteed income stages a comeback when market turbulence returns and interest rates start to rise."
5.5 million UK savers
According to Aegon, since the introduction of pension freedom, 5.5 million UK savers - that is, 14.1% of the UK population - are now saving more into their pension, and a further 15.3% realise they need to plan better for retirement.
Aegon pensions director Steven Cameron said: "The 2015 pension reforms put many more retirees in the driver's seat for the first time.
"Two years on and all the signs point to the pension freedoms having paved the way for a smoother road to retirement - people have moved up a gear, saving more and becoming more engaged with their pensions."
The reforms appear to have provoked a different response among men and women. According to research by EValue, women have been more consistent in their approach to the new options available to them, with about 50% of women eligable for drawdown favouring flexible income throughout the two years.
Men embraced the idea of flexibility, however, but then stepped back when volatility hit the market. Initially, around two-thirds (64%) of eligible men chose to flexibly access their pension. This proportion dropped to less than half (47%) at the start of 2016, and then crept back up to around 55% today.
EValue's Moss said: "The differences in the responses of men and women to pension freedom are interesting. Women have had a more positive view throughout on the merits of guaranteed income and cash. Men on the other hand really embraced the idea of flexibility and then cooled when volatility hit the market.
"Sadly it seems that men have shown a tendency to follow the market - buying high and selling low as bad investors are inclined to do."
Flexibility would appear to appeal more to those with bigger pension pots. According to EValue, there is a strong correlation between a larger pot and greater flexibility - of those with pension savings of up to £50,000, around 40% accessed their pension flexibly and 41% opted for a guaranteed income.
Of those with pots of £150,000 and more, however, 66% chose to access their pension flexibly, while just 26% chose a guaranteed income.
Pension freedom also highlight a generational difference of opinion. Some 55% of baby-boomers have or plan to access their pension flexibly, in comparison to 39% of millennials.
Moss said: "There is lots of evidence that millennials are pessimistic about their financial prospects and our results consistently show this translates into relative risk aversion compared to baby-boomers."
Lamborghinis for all?
Although, the then pensions minister Steve Webb famously said at the time the reforms could encourage pension savers to splash out on Lamborghinis, the reality would seem far less glamorous.
Research from Retirement Advantage has found 28% of people in drawdown spent the cash on home improvements, 26% put the money in a savings account, and 19% invested elsewhere. Meanwhile 19% used the money to go on holiday and 12% paid off their mortgage or other outstanding debt.
In the end, just 13% put some of the money towards a new car - and few of these are likely to have been Lamborghinis. While monthly sales of the car in Europe did see a 20% month-on-month spike in April 2015, according to Carsalesbase.com, it was from 90 to 106. The most Lamborginis sold across Europe over the last two years was the 140 in June last year.
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