The new rules that will allow people over the age of 55 to release funds from their pension pot is expected to boost sales of new and used cars in the UK.
Swindon, Wiltshire -- (SBWIRE) -- 04/24/2015 -- This huge change in the personal finance rules is probably the biggest in modern times. The change means that those aged over 55 will be able to release their defined contribution from their pension fund.
People are no longer going to be forced to buy an annuity and can release their pension funds at any point. It is estimated that people will withdraw around £6bn form their pension funds, which is likely to lead to a significant increase in consumer spending.
Car dealers in Swindon and many other parts of the UK have already seen an increase in demand from those aged over 55. More consumers in that age bracket are visiting car showrooms. Many have indicated that they are considering using cash to buy, which means that they are likely to be using cash released from their pension pot to buy their next vehicle.
Ironically, this trend was anticipated by the minister who made the changes. Steve Webb the pensions minister said last year:
"If people do get a Lamborghini, and end up on the state pension, the state is much less concerned about that, and that is their choice."
At the time his comment was seen as a bit tongue in cheek, but reports from the car industry indicate that he was at least partially right about how people would choose to spend their pension funds.
However, it appears he was probably wrong about what type of car people would buy. There is no evidence that people are actually using cash from their pension pots to buy expensive cars like Lamborghinis. Instead, people seem to be taking the opportunity to upgrade their existing vehicle to one that is more reliable and economical. Most studies indicate that people are not interested in using all of their pension cash to buy their dream car. Most will simply use it to buy a newer family vehicle.
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