Pensions Shake-up Frees Tax-free Cash

The forthcoming pensions shake-up will allow some older people to have more cash at the ready which they plan to spend on holidays and clearing their debts, a new survey reveals.

From A-Day on April 6th, those eligible to access their pensions can withdraw up to a quarter of their unused pension funds tax-free.

More than a third of the 1,000 people aged between 25 and 54 said they would use this money to go travelling like many a gap year student, according to Lloyds TSB Private Banking.

A further third said they would use the lump sum to pay off their mortgage.

But many parents preferred to put their children's future before their own leisure time with 21 per cent saying they would use the money to help their offspring get onto the property ladder with a further 18 per cent setting it aside as inheritance.

A further 17 per cent said they would use their tax-free pension withdrawal to buy a property abroad with a further 13 per cent looking to spend it on a new home in the UK.

Mark Cheshire, chief executive of Lloyds TSB Private Banking, said: "The changes to the pension rules will give people much more financial freedom and flexibility.

"Whether it's been your lifelong ambition to explore the world or you simply want to pay off the mortgage, the options are open.

"But, before booking your round the world ticket, it's always worth considering what you will need in the future and making your money work in the best way for you."