View more on these topics

More than £14bn accessed through pension freedoms

UK-Currency-Money-Notes-20-GBP-700x450.jpgSavers 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.”

Recommended

Pension-pot-700.jpg

Pension freedoms see DFM adopt monthly distribution for income fund

Man GLG has announced that its UK Income fund is switching to monthly distribution in response to pension freedoms. The top-ranked £254.5m fund currently pays out dividends biannually, but investors will receive their first monthly payment at the end of this month. Man GLG managing director for UK retail Richard Phillips says investors have been seeking […]

2

Richard Parkin: Can a parliamentary inquiry make sense of pension freedoms?

The FCA’s own analysis of pension freedoms problems overlooks the fact the solution must start by examining outcomes rather than products It has gone consultation crazy in the retirement world again. Just as we have put to bed responses to the FCA’s consultations on defined benefit transfers and the interim retirement outcomes review report, the […]

Spotlight on charges 700x450.jpg

AJ Bell wins Sipp charges complaint

AJ Bell has won a case against a client who wanted his platform fees for the past 14 years reduced. A client, referred to as Mr N, complained to the Pensions Ombudsman that, because he did not have enough information about what fees would be payable, he sold a property holding in his Sipp far […]

Neptune launches Japan Institutional Fund

By Chris Taylor, Investment Director, Head of Research Neptune is excited to announce the launch of the Japan Institutional Fund on 22 June, having disclosed to the market in March its intention to offer the product. The Fund will be managed by the highly-regarded Chris Taylor, Head of Research and manager of the long-running Japan Opportunities Fund. It will invest in the same underlying stocks as the Japan […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. A grossly irresponsible piece of legislation that will be of disadvantage to many more people than not.

  2. We are in full agreement Julian.

    Nothing more than a grab by HMRC which has advantages for providers, advisers, fund managers and platforms but unless you have upwards of £500k not at all a good deal for clients.

    BBC reported this week that many were being totally irresponsible and highlighted on example – a man with around £150k – cashed in the lot and blew it on booze gambling and a new car. I wonder how many others did similar and will now be claiming benefits into their dotage.

    I’m so thrilled in paying for these idiots through my tax.

  3. “blew it on booze gambling and a new car”… and just wasted the rest.

Leave a comment