Look at other retirement options, urge advisers

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MORE than four-fifths of financial advisers are encouraging their clients to supplement their pensions with other retirement saving strategies after hearing the changes announced in the Chancellor’s pre-Budget report, according to a new survey.

Venture capital investor Albion Ventures LLP commissioned the study of 274 people including IFAs and wealth managers, which also found that 66 per cent believed George Osborne’s plans to cut the pension contribution allowance to £40,000 and reduce the lifetime limit from £1.5m to £1.25m would undermine public confidence in pensions.

Almost half of advisers – 45 per cent – said more people should consider venture capital trusts as a tax-efficient way of supplementing their pension savings.

Patrick Reeve, managing partner of Albion Ventures, said: “While these cuts are aimed at higher earners, as an unintended consequence, an already low level of public confidence in pensions could be damaged further.

“What is clear from the research is that these changes have acted as a catalyst for advisers to explore other ways clients can supplement their retirement savings.

“With a sizeable portion of the UK’s baby boomers retiring over the next decade, there is growing pressure to source predictable levels of attractive income and it’s no surprise that we have seen a steep rise in enquiries from advisers.”

Mr Reeve said VCTs appealed to people both before and after retirement, offering either a long-term savings option with 30 per cent income tax relief on reinvested dividends, or a way to supplement a pension.