Endowment cash could cover cost of high living standard in retirement

Publication date | 15/01/2010

From April 6th, the minimum retirement age rises from 50 to 55, but almost 40 per cent of Britons aged between 50 and 54 are unaware of this, a new survey has revealed.

The Prudential study found that 47 per cent of people aged between 45 and 49 were unaware of the change.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some if its customers who were approaching retirement age - or who had already left employment - had decided to sell their underachieving endowment policies to raise money so that they could enjoy their retirement, such as regular trips to a second home.

Britons unaware of changes in retirement age

Despite the impact that it could have on their plans for the future, a large percentage of people are unaware of the change coming into effect in April.

Prudential stated that individuals aged between 50 and 55 could find the rule change comes as a blow if they had already planned to retire this year.

Indeed, six per cent of this age group - 3.9 million - were going to retire this year.

Britons who have already retired may have found their coffers dented because of the drop in interest paid out on savings accounts.

In order to maintain the lifestyle expected - such as regular trips to a holiday home - retirees may want to find a large sum of cash to allow them to do so, rather than taking on debt such as personal loans.

Karin Brown, director of annuities at Prudential, said: "The government first announced the changes to minimum retirement age nearly six years ago so there has been plenty of time for the news to sink in."

Endowment policy cash could help prepare for future

Mr Radford, from aap, said some of its customers who had yet to retire but who were worried about debt impacting on their lifestyle plans had decided to sell their unwanted endowment policies to help clear what they owe.

He added that should aap make an offer to purchase an endowment policy it will always pay more than the surrender value offered by the insurance company.

Reasons to sell your endowment policy