Over 2m people set to take advantage of new pension rules according to Channel Four programme, Dispatches

Changes to the pension rules in April will see an estimated £6bn withdrawn from pension schemes by those aged 55 and over, according to a report by Channel Four’s "Dispatches".

The figure is three times higher than initial government predictions expected and shows the current preference of taking cash rather than purchasing an annuity, which would offer an income for life.

The news comes as the government announces information about the free and impartial pension guidance scheme which is designed to offer independent advice for those looking to make a decision.

As reported by the Financial Times, Alan Higham, retirement director of Fidelity Worldwide Investments said in an interview: “About 20 per cent of the callers we’ve had are from people who have made very quick plans to spend money on house improvements, buy a new car, go on holiday… and are looking to access their pension funds quickly for that purpose.”

There are concerns, including those expressed by the charity Age UK, that pensioners may not use the money invested correctly, leading to people running out of cash in later life as they take advantage of the relaxed rules today.

Along with the charity, financial advisers and the government are urging people to not make rash decisions and to always seek independent advice, free or otherwise, before withdrawing their money.

Aside from running out of money, large withdrawals from pension pots may attract large tax bills which could be avoided by managing finances correctly.

Robert Hallums, founder at Experts for Expats agrees with the fears, but thinks expats must be extra cautious, “The level of freedom being offered to people with pensions in April is unprecedented and with finances being tight, the temptation will be to enjoy the money. But it’s important to seek advice before any decision is made. For expats especially, being able to choose an adviser who can offer sound advice, which incorporates the complexities of living abroad as well as future plans. Not all advisers can or will offer advice which is in the best interests for expats.”

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