Savers have accessed £14.2bn through pension freedoms since the reforms were launched in April 2015, according to data from HM Revenue and Customs.
Nearly 200,000 people took payments from their pension totalling £1.59bn in the third quarter of this year.
The total payments increased from £1.54bn in the same period in 2016 when 158,000 people withdrew from their pension.
The data from HMRC covers “flexible payments” from pensions, which include full or partial withdrawals, flexible drawdown and buying a flexible annuity.
So far in the current tax year there have been £3.45bn flexible pension payments which is an increase from £3.31bn in the first six months of the 2016/17 tax year.
Hargreaves Lansdown senior pension analyst Nathan Long is not surprised the value and number of people taking flexible payments has increased as drawing income and lump sums from pensions becomes more popular.
Long says: “This will be a boost to the Treasury and bizarrely may stave off any further tinkering to pension allowances and reliefs in the forthcoming Budget.”
AJ Bell senior analyst Tom Selby highlights the average value of withdrawals per person has hit its lowest point of £8,030 in Q3.
Selby says: “The fact people are on average taking less out per quarter doesn’t point to mass irresponsible spending, although we need a wider picture of people’s incomes and personal situations to draw firm conclusions.”
Both Selby and Long say the figures will feed into the Work and Pensions Select Committee inquiry.
Selby says: “We are concerned that an engagement gap could be emerging among savers who use the freedoms. For many the only aim is to get their hands on their tax-free cash as quickly as possible, with little thought being given to things like investment strategy.”
He adds: “The fact large numbers of people who withdraw their entire pension simply shove it in a bank account is evidence of this. Improving engagement and understanding of retirement saving needs to become a central aim for the Government.”