Lucinda Connell, North East’s Top Specialist Family Lawyer of Major Family Law, specialist divorce and children solicitors, comments that savers who blow their pensions on a Lamborghini – or any other luxury – under new freedoms are being warned that they cannot expect to fall back on benefits.
From next month, under the biggest changes to pensions for a century, anyone over the age of 55 will be able to take their retirement nest-egg to spend how they like. Many are expected to spend the cash on buy-to-let properties, while others are planning to give cash to young relatives to help them on to the housing ladder.
When the new rules were announced, pensions minister Steve Webb quipped that savers could spend their cash on a Lamborghini if they wished. But the DWP says people who spend, transfer or give away their pot risk being denied the safety net of benefits if they are found to have deliberately deprived the state of cash. They will still have their pensions counted as a source of income or assets when deciding if they are eligible for benefits even though the money may have long been spent.
Pension investors are recommended to take proper advice when making decisions as to how to utilise their retirement savings.