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Cruises, property set for UK silver spending spree

Cruise and holiday groups, along with buy-to-let property are just some of the sectors set for a boost this year, following the launch of new rules around U.K. pensions that give savers more control over their retirement funds than ever before.

Holiday and cruise group Saga said they expect an extra £1.5 billion ($2.2 billion) will be released from pension pots, some of which is likely to be spent on a dream holiday, they said.

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Dennis Macdonald | Photolibrary | Getty Images

The sweeping changes to pension rules, first announced by finance minister George Osborne at the end of last year, with changes finalised last month, kicked in this week and will allow savers over the ages of 55 to withdraw money from their pension plan.

The National Association of Pension Funds (NAPF) said according to their research, a large majority of pension savers were for the enhanced freedoms, with 82 percent of 55-70 year olds positive about the changes.

Half of the 850 savers polled by the NAPF who have a plan for their savings intend to take as cash some of their taxable pension savings.

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At the same time, just over a quarter (27 percent) of these people said they would spend it on a one-off purchase such as a holiday or a car. But the majority (67 percent) think they will save and invest it, only spending it gradually.

"It's great news that days away from their launch there's still a high degree of support for these reforms; but savers are also worried about some of the risks as most decisions now fall on their shoulders. It's clear there is much for the government and industry to do to ensure these fears do not turn into reality," Joanne Segars, said chief executive of NAPF.

The changes mean individuals now have freedom to pull money from their savings and spend it early, rather than wait on retirement or buy an annuity which provides a fixed, regular income.

"Across the board, bookings are strong particularly for cruises and long haul holidays. We believe the changes are likely to be positive but it's all moving in same direction. People are living longer, healthier and wealthier lives. It's therefore incredibly difficult to dis-aggregate this generational trend from this particular change but our estimates that an extra £1.5 billion will be released this year alone as a result of the changes and our research shows that 8 percent of those releasing money from pensions would use some of that money for a holiday," a spokesperson from Saga said.

At the same time, capacity in the cruise industry has ballooned, with two of the largest cruise ships ever built for British holidaymakers, P&O Cruises Britannia and Royal Caribbean's Anthem of the Seas, arriving in British waters.

The Britannia, named by the Queen last month carries over 3,600 passengers and set off on her maiden voyage last month, while the next-generation Royal Caribbean cruise ships launching this month will hold 4,180-passengers, with 2,090 cabins.

Along with cruises and package holidays, investment in property is also set to get a boost, with help-to-buy properties an attractive option for savers according to Brian Hilliard, chief UK economist at Societe Generale.

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"It is going to give a boost to consumption, that's clear, and it may give a boost to investment, if we are worried about a risk it's that people are going to go out on a spending spree in consumer goods," he said.

"If they are going to buy something in investment, buy-to-let, classic cars whatever it may be, that is less of a concern. It could certainly help buy-to-let, that is one obvious area," he added.

Saga also surveyed more than 10,000 savers over 50, and while some may be willing to treat themselves a little early, a huge majority wanted to hang onto to their savings

"By far the greatest response to the survey was those saying that they wanted to secure the best financial income they could for their retirement," Saga Group said

Interestingly the Lamborghini salesmen who were rubbing their hands in glee at the thought of getting their hands on this wealth might be a little disappointed as in our survey of more than 10,000 over 50s, only 54 said they planned to splash the cash!"