ABI: £6bn withdrawn since pension freedoms launch

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Savers have withdrawn £5.9bn since the pension freedom reforms came into force, according to the Association of British Insurers.

The new data, which covers the first nine months of the reforms, reveals £3bn has released through 213,000 lump-sum payments, with an average payment of £14,800.

The trade body adds £2.9bn was taken through 835,900 income drawdown payments, with an average payment of £3,500.

Annuity sales (21,200) outstripped drawdown sales (19,700) during the final quarter of 2015, although the value of drawdown sales (£1.4bn) remains higher than annuities (£1.1bn).

In the first nine months of the reforms, £4.2bn has been invested in 63,600 income drawdown products, with an average fund of £66,000.

Similarly, £3.3bn has been invested in around 61,700 annuities, with the average figure invested nearly £53,000.

ABI director of policy for long terms savings and protection Yvonne Braun says: “One year on from the pension reforms, the freedoms are settling in and working as intended. This is a credit to providers who worked incredibly hard to get ready for the changes with less than a year to implement them.

“Following some initial pent-up demand, the number of people accessing their pension pot as cash in one go has settled down. People are taking a sensible approach and considering how they will pay for their whole retirement.

“Our key challenge remains ensuring people save enough for their retirement. With increasing life expectancy and declining final salary pension provision, we must turn our attention to helping customers grow bigger pots.”