Pension lump sum 'paying off debt'

Last Modified: 12 Sep 2008
Source: PA News

A quarter of retired people are using part of their pension lump sum to repay debt, a survey has showed.

Around 24% of pensioners admitted that part of the tax-free lump sum they received when they stopped working had been used to repay debt, with a further 17% using it to pay off their mortgage, according to Scottish Widows.

But others are using their money to enjoy life during retirement, with 45% saying they were travelling more, while 30% are carrying out more home improvements.

One in 10 people who have stopped working said they had taken up an evening class and 46% said they were spending more time in the garden.

But the group warned that today's workers faced a more frugal retirement, with 49% of people who have yet to retire failing to save enough into a pension.

Ian Naismith, head of pensions market development at Scottish Widows, said: "It is encouraging to see that so many people are enjoying themselves after they retire, but it is vital that people who are still working realise the difference between wanting a good retirement and actually planning for one."

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