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Pension freedoms cash withdrawals plummet

Pensions-savings-retirement-piggy bank

The rate at which savers are raiding their pension pots has plummeted since the freedoms were launched in April last year.

The regulator’s latest figures show 127,094 pots were accessed for the first time, to take an income or make a full withdrawal, between October and December 2015.

This represents a 36 per cent fall on the previous quarter when 197,443 pots were accessed. In the first three months of the reforms almost 220,000 people accessed their pension.

As a result of the fall in overall access, full cash withdrawals were down 42 per cent quarter-on-quarter, from 113,100 to 65,610.

The data also reveals the number of people not taking guaranteed annuity rates is falling. Between July and September 2015, some 68 per cent decided to transfer or take cash instead of using a GAR but this fell to 63 per cent in the following quarter.

Despite the introduction of the freedoms, savers are still more likely to buy a retirement product from their existing provider. Fifty-three per cent of drawdown contracts and 57 per cent of annuities were bought from ceding providers.

In addition, 68 per cent of drawdown and 42 per cent per cent of annuities were sold where the customer used a financial adviser.

This falls to 36 per cent and 34 per cent when savers fully withdraw their pension or use UFPLS, respectively.

The data comes from 94 retirement and pension providers, representing 95 per cent of the defined contribution market.

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