More than a third (35%) of 55-75 year olds thinking of dipping into their pension pot would consider spending some on a holiday or travel, according to Abta research.
The findings come amid weekend reports that travel companies are gearing up for over-55s to spend thousands of pounds of their retirement pots on multi-generational cruises and long haul flights as billions of pounds of money tied up is made available under changes to pension regulations from yesterday (Monday).
The Observer reported that pension providers are trying to tie up with the travel industry to benefit from the changes to the pension rules. One travel company said it had been approached by a marketing agency offering a partnership with some “large financial service providers”.
One in five of those eligible would consider taking cash out of their pension and a further 15% were still undecided, the Abta poll found.
Taking a holiday was the most popular option to spend some of this money on among those surveyed, followed by home improvements (31%) and paying off existing debts (24%).
One in five (18%) also stated they would consider using pension money to help other family members. A few family members may also benefit from a free holiday as 5% of those planning to spend on a holiday say that they would take adult family members with them and 9% would take family members with children.
For those planning to spend on a holiday, 59% plan to take a ‘holiday of a lifetime’ and more half (56%) would spend more than usual on a holiday.
A quarter (24%) said they would go on a cruise and this rose to a third (32%) of couples.
Survey respondents were most likely to be planning to spend £2,000-£5,000 on a holiday with more than a third (37%) saying they would spend this amount, while 15% said they would spend between £5,000-£10,000 and 5% said they would spend over £10,000. Single people were twice as likely to consider spending over £10,000.
For people considering using pension funds for a holiday, a break of 7-14 days was the most popular option with half (48%) stating they would go away for this amount of time. More than a third (36%) would go away for 14-28 days and 14% would take an extended holiday of over a month, one in five (19%) people in a couple would take this option.
Europe was the most popular destination for those planning to spend some money on a holiday, with four in ten (41%) saying they would use their money to travel there, followed by North America (22%), Australasia (17%), Asia (10%), Africa (7%), and South America (6%).
Abta chief executive Mark Tanzer said: “The changes to pension regulations mean that many over 55s may choose to spend some of their pension pot on a holiday.
“We know that people often celebrate big occasions such as anniversaries, birthdays or retirement with a holiday so it’s perhaps no surprise to see travel topping the list of items pensioners may spend some of their money on.
“Many pensioners also have the freedom to travel, often the kids have flown the nest, mortgage debts have reduced and they have more leisure time.
“However, we would always remind people to take this decision carefully, perhaps consulting advice such as the government’s Pension Wise service. We would also urge anyone booking to ensure that they do so with an Abta member so that they can travel with confidence.”
Richard Downs, who runs Iglu and Planet Cruise told The Observer: “We have already seen a rise in 3G holidays – three generations holidaying together – and we expect this to escalate.
“At the moment the over-65s might trade down their house to release equity, but these pension changes effectively fast-track this release, allowing people to make such life choices at an earlier age.
“It gives those in their late 50s the chance to pay for their parents to go on holiday – possibly for the last time – and also their children. If they were to leave this another 10 years they might not get the chance.”