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Investors stay ahead of the game for A-day

23rd November 2005 | back to article listings BACK    print this article PRINT

Investors are fully clued up and set to take advantage of the pension changes coming in on the so-called 'A-day' next year, according to research done by the Association of Investment Trust Companies (AITC).

Over 83 per cent of active investors are familiar with the upcoming pension changes, setting them well ahead of the general public for making the most of the new legislation. Less than three in ten of the general public knew about the changes, leading the AITC to brandish the differences as a significant "knowledge gap".

Being aware of changes in the financial environment can have dramatic effects on your wallet, it seems. Those more financially educated, said the association, were more likely to benefit from the offers out there. Significantly, a quarter of regular investors are poised to change their pension portfolios to benefit from the new flexible rules, while only three per cent of the general public plan to make any changes to their pension portfolios after 'A' Day.

The survey also found that investors were more willing to take risks with their money, often being rewarded with much higher returns than traditional schemes. Only two per cent of investors said they were not willing to make such risks with investments, compared with close to two in ten of the general public.

Annabel Brodie-Smith, communications director at the AITC, said that many still remained in the dark when it came to finances: "With so many people in the dark about pensions simplification, if ever there was a relevant time to raise the issue of financial education must surely be now. The very significant 'knowledge gap' identified by this research illustrates something that the AITC has known for many years: being financially aware can have a real impact on your financial decisions, not to mention your wallet.

"A significant proportion of those active investors who have heard about pensions simplification are already planning changes to their pensions. But with the majority of the general public unaware, it looks like the winners – in the short-term at least, are not surprisingly going to be the financially savvy minority. The pension changes present a real opportunity for the financially aware or those who have access to advice, but unless the issue of financial education is addressed the majority of people are going to miss out."

From next April new rules will allow anyone to use the value of their property to get involved in such a scheme. Experts say that the predicted pensions crisis is likely to require greater planning ahead, with the public urged to consider long-term savings and asset investments. The government-appointed Pensions Commission is set to publish a report later this month outlining proposals aimed at encouraging greater private pension saving levels in the UK.

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