Following changes to UK pension regulations this week, which will now allow millions of people aged over 55 to access their pension pots, research for ABTA has revealed that one in five (20%) 55-75 year olds would consider taking cash out of their pension and a further 15% were still undecided.
Of those considering taking money out of their pension pot, over a third (35%) would spend some on a holiday or travel. Taking a holiday was the most popular option to spend some of this money on among those surveyed, followed by home improvements (31%) and paying off existing debts (24%).
One in five (18%) also stated they would consider using pension money to help other family members. A few lucky family members may also benefit from a free holiday as 5% of those planning to spend on a holiday say that they would take adult family members with them and 9% would take family members with children.
For those planning to spend on a holiday, it appears that for many it will be no ordinary holiday. Six in ten (59%) plan to take a ‘holiday of a lifetime’ and over half (56%) said that they would spend more than usual on a holiday.
Survey respondents were most likely to be planning to spend £2-5000 on a holiday with over a third (37%) saying they would spend this amount, while 15% said they would spend between £5-10,000 and 5% said they would spend over £10,000; single people were twice as likely to consider spending over £10,000.
For people considering using pension funds for a holiday, a break of 7-14 days was the most popular option with half (48%) stating they would go away for this amount of time. Over a third (36%) would go away for 14-28 days and 14% would take an extended holiday of over a month, one in five (19%) people in a couple would take this option.
Europe was the most popular destination amongst those planning to spend some money on a holiday, with four in ten (41%) stating they would use their money to travel there, followed by North America (22%), Australasia (17%), Asia (10%), Africa (7%), and South America (6%).
A quarter (24%) also said they would go on a cruise and this rose to a third (32%) of people in a couple.
Commenting on the report, ABTA CEO Mark Tanzer said: “The changes to pension regulations mean that many over 55s may choose to spend some of their pension pot on a holiday. We know that people often celebrate big occasions such as anniversaries, birthdays or retirement with a holiday so it’s perhaps no surprise to see travel topping the list of items pensioners may spend some of their money on. Many pensioners also have the freedom to travel, often the kids have flown the nest, mortgage debts have reduced and they have more leisure time. However, we would always remind people to take this decision carefully, perhaps consulting advice such as the Government’s Pension Wise service. We would also urge anyone booking to ensure that they do so with an ABTA Member so that they can travel with confidence.”