More than 200,000 pension policies were accessed during the first three months of the freedoms, more than double normal levels, FCA figures reveal.
Of those, 71,455 entered some kind of drawdown contract, 12,418 bought an annuity and 120,588 made a full or partial cash withdrawal.
The data was collected by the FCA on 107 providers – focusing on the 15 largest firms – between April and June.
Around 100,000 pots were accessed in the same period of 2013, FCA director of policy, risk and research Chris Woolard told the Department for Work and Pensions select committee this morning.
He added the average time taken to transfer a pension pot was 16 days.
ABI figures published at the start of September revealed savers have withdrawn £2.4bn from pension pots in the first three months of the new freedoms.
The ABI found £1.3bn has been paid out in cash lump sums, with an average payment of around £15,000.
An additional £1.1bn has been paid out through 264,000 drawdown payments, with an average payment of around £4,200.
Given the pent-up demand from last year, when everyone was waiting for the freedoms to start taking effect, and allowing for the fact that most people have more than one pot, I’d say the total number is pretty unremarkable. The breakdown is more interesting, though…
Andy
The issue of pent-up demand has been one that has been largely ignored in comments surrounding the new pensions freedoms, especially by critics!
The telling point in the article is that these figures are compared to the same period for 2013 – so what happened to 2014?
We know that annuity sales were drastically down in 2014, so it would be useful to have comparison figures for accessing pension pots as a whole for 2014 to see how big a dip there was, and therefore get a better idea of how big the spike has been in 2014.
I suspect that as we go through the year, the numbers will decline and start to revert back towards the average (taking into account of course that with more people hitting retirement age each year there should be a natural increase in the number of pots being accessed year on year).
How much of the $2.4 bn has gone to the treasury as income tax?
Why the comparison between 2013 and 2015. What about 2014.
The problem is, once spent it is all gone.
Few customers seem to think beyond the present.
The shame of it is that, for most people, cashing in their pension policies/funds (with a savage tax hit on 75% of them) is very probably absolutely the wrong thing to do, in many cases (I suspect) abandoning from that point on any further retirement saving. They should be ADDING to their retirement savings provisions, not abandoning them. But what can I do about it? You can lead a horse to water…..