The value of pension freedom withdrawals is slowing down, according to the latest data from HM Revenue and Customs.
Savers withdrew £1.5bn from their pots in the third quarter of 2016, compared to £1.8bn in the second quarter.
Though the number of individual payments out increased from 296,000 to 324,000, fewer people accessed their pots; 158,000 in the third quarter compared with 159,000 the quarter before.
The average withdrawal per person has now fallen to just under £10,000 and has been in steady decline since the quarter immediately following pensions freedoms, when average withdrawals were around £19,000.
AJ Bell senior analyst Tom Selby says: “It is interesting that the average withdrawal per person has gradually reduced since the launch of the freedoms, suggesting the initial dash for cash has tailed off and people are becoming more realistic about a sensible withdrawal level over time.
“However, an average withdrawal rate of £10,000 per person in a quarter still feels high in relation to the average pension fund size of around £40,000 in the UK. This shows the limitations of this data. To get a full picture of how successful the pension freedoms are it would be good to see what these withdrawals are being used for and to have some sense of how much people have remaining invested in pensions.”
Just Retirement group communications director Stephen Lowe warned that even those withdrawing lower value funds should still seek advice or guidance because of the tax implications.
Lowe says: “It appears we have reached a steady level of people exercising their pension freedoms to take on average £10,000 out of their pension pots. That is enough to push someone on basic state pension into the next tax band, and almost certainly is for those who are still working. The risk of triggering an unexpected tax bill, of being faced with complex product choices and of being subjected to increasing scamming activity requires people to get more help.”