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Has the UK just made retirement more risky?

Experts are divided on the effect on the markets from sweeping new changes to the U.K.'s pension regulations that were implemented Monday.

The latest U.K. pension reforms will mean that more than half a million over-55s will be given the opportunity to take control of their own retirement savings and spend, save or invest them as they wish.

Older savers will now get full access to all of their pension pots and remove the need to buy an annuity to provide guaranteed income for life.

However, the measure, announced by U.K. Chancellor George Osborne in last month's annual Budget, has raised concerns that the government has not done enough to ensure pensioners are adequately prepared for the change.

The deadline for implementation of measures designed to help educate those affected is not until 2016 – a year after the measures are introduced -- and there was a scramble to make sure there were enough advise centers before April 6th.

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All this could mean that pensioners could delay the cashing in of annuity products while they wait for more clarity.

For now, there's a split over where all this extra discretionary spending power will be invested.

Some leisure providers are gearing up for a potential spending boost. Paul Green, director of Communications for the UK-based over-50s product and service provider, Saga, noted "The UKs over 50s hold 68.3% of all household wealth and this year £1.5 billion of pensions savings will be unlocked.

"People these days are healthier and still have a thirst for adventure - which is why taking a holiday or cruise is right at the top of many people's wish lists as they approach retirement."

Property is also seen as a potential outlet for soon-to-be released funds. Alex Thompson, director of UK-based estate agents, Winkworth Notting Hill, observed ""With the recent pension changes we fully expect to see people taking the opportunity to invest in property, particularly in small, manageable units that will make for good buy-to-let investments."

But how will UK shares fare? Will investors use their investing freedom to chase the FTSE 100 which recently soared past 7,000? Or will withdrawals from pension funds invested in UK equities cause a net negative impact on share prices?

David Battersby, Investment Manager at UK Stockbroker, Redmayne-Bentley, doesn't see a significant short-term risk for UK equities, "A grand rush to exit funds is improbable and maturing pensions are unlikely to be heavily exposed to equities as pension fund managers towards retirement age tend to move asset allocation towards gilts to reduce market risk."

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"Longer term, it will be hugely supportive as knowing that you can get your money out will encourage individuals to invest more. It could mean that in the longer-term, the UK market may trade on less of a discounted multiple to the US."

A key factor impacting how investors deploy funds will be how the broader yield environment evolves. Higher yielding equity sectors, such as oil and banks, have attracted much interest as interest rates have hovered around all-time lows in recent years and are seen by some as likely to attract the bulk of flows that do head out of annuities and into discretionary equities.

However, when the Bank of England does raise interest rates –Governor Mark Carney said at the Bundesbank Conference in Frankfurt Friday that the next move for UK rates would be up – the appeal of equities as a source of yield may diminish relative to opportunities in UK fixed income.

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