Gambling seems to be expanding its influence on UK residents’ lives by the day. Reportedly, Members of Parliament have been informed that some local residents who have already retired are preferring to use their so-called pension freedoms to fund their gambling and drinking habits.
Back in 2015, some changes to pension rules have been introduced by the then-chancellor George Osborne. These changes provided people over the age of 55 with the chance to choose how to spend their pension savings without any restrictions. Before these changes were made, retired people were not allowed to spend their pension cash as they wished, with most of them even being required to buy a guaranteed yearly income.
UK Retirees Spend Their Savings on Gambling
At that time when there were some restrictions imposed, Ministers claimed that such a regime was not favourable to pension savers, as the latter were effectively forced to purchase some allowance. Unfortunately, the more liberal approach does not seem to be working well either, as there have been evidence that some retirees are exploiting the new rules and prefer spending their freedoms on alcohol and gambling.
According to a written submission to the Commons Work and Pensions Committee which has been engaged in carrying out an inquiry into pensions freedoms, five people in Lancashire have claimed benefits after emptying their pension pots in a few months. The cases were reported by Pamela Hewitt, a welfare rights officer. Ms. Hewitt reported a number of cases of individuals who asked for help after exhausting their pension pots.
According to the reports, five pensioners spent their pensions savings within months of retiring, with one of them spending the massive amount of £120,000 on a car, gambling and alcohol. The benefits of the person were reinstated after an appeal, although he was warned that they could be stopped again in case that he was found to deliberately spend the pension money while asking the Government for help.
In her written submission, Ms. Hewitt explained that the person probably did not want to take advantage of the benefit system, but had certain addiction issues and was not able to deal with them, spending the money on gambling and alcohol even against his accountant’s advice.
FCA Says Problem Is Not So Widespread
Experts have reported that most of the one million individuals, who have accessed their pension pots over the past two years have spent only small amounts of money. Data released by the Financial Conduct Authority (FCA) showed that approximately two-thirds of the payments made through these pension pots have been estimated to sums lower than £30,000.
Back in July 2017, the Financial Conduct Authority have reported that most of this money was being spent wisely, with many retirees preferring to put the money into other savings accounts. According to research published by the FCA at the time, pension pots amounting to £1 million had been accessed since the changes in the pension rules were made. It seems that the individuals under the age of 65 were the ones who were taking massive sums of money, with two-thirds of pensioners withdrawing all of their pension savings and chose to either save or invest the money, or use it to pay off debts.
- Author
Daniel Williams
