There have been calls for the chancellor to reorganise the pensions’ system in his debut statement, which might include paring back the pensions’ freedoms introduced by his predecessor, George Osborne.
Earlier this week Hammond raised concerns over the security of investors’ retirement pots and promised to clamp down on cold calling.
Giving control
CoInvestor cited YouGov research showing that 48% of mass affluent Britons who took advantage of the government’s changes to pensions legislation in 2015 did so because it gave them control of their own investments.
A further 28% enjoyed being able to withdraw their pension at a lower tax rate, while one in five felt it allowed them to diversify into tax efficient investments.
Just one-fifth of respondents said pensions freedoms had not benefitted them, although 30% of those said this was because they were already drawing their pension.
Alternative asset increase
The survey also found an increased use of alternative assets within portfolios in pursuit of higher returns and greater tax efficiency.
It showed that around one in ten respondents said they are interested in investing in private equity funds (11%) and start-ups (9%) in the future.
This trend was strongest among those under the age of 34, particularly post-Brexit. Only 20% say they would invest through a fund, while 35% prefer to invest directly using an online platform.
The survey also found those who are reluctant to invest are largely driven by a fear that they do not have sufficient knowledge to be able to make an investment decision (55%) or that they were worried about risk (36%).
Trend of taking control
Charles Owen, founder of CoInvestor, said: “Clearly we are seeing a trend by private investors to take control of their pensions, their investments and their money.
“Individuals want to maximise their returns and protect again market volatility, which is especially apparent in the current fragile socio-political outlook.
“As such, there is increasing consideration of alternative assets as a way to generate more income yield, take more calculated risk or maximise tax efficiency. This is particularly relevant for an aging population looking to support their retirement.”
He added that financial advisers who do not adopt new technology risk losing relevancy, especially among online-savvy younger investor audience.
