UK Money News
10th June 2008
Pensioners urged to use retirement money wisely
Pensioners have been urged to be wary of taking out lump sums of money from their company pension funds to spend or give away.
Prudential issued the warning after a survey revealed that three quarters of pensioners with company pension schemes had taken out an average of £24,000 as a lump sum.
However, rather than invest the cash for the future, many they are spending this on big-ticket purchases or giving it away to relatives.
In so doing, they could be risking their own financial future, according to Guy Shaughnessy, managing director at the Retail Life & Pensions wing of Prudential.
He said: "Even in retirement, people have to plan for the longer-term or they run the risk of their finances becoming increasingly strained.
"As a result, we would urge people to think very carefully about spending lump sums in the early years of retirement and instead encourage them to look at other options, such as investing the money in savings schemes that can be used to supplement their retirement income while maintaining the capital."
Of the pensioners surveyed 13 per cent said they had given all or part of the sum to their children, while 17 per cent had used the money to buy a new car.
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