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Pension withdrawals hit £1.7bn in first quarter

Savers withdrew £1.7bn using the pension freedoms in the first quarter of this year, according to data from HM Revenue and Customs.

This is an increase of 6 per cent compared to the first quarter of 2017 when £1.6bn was withdrawn.

There were 500,000 payments made to 222,000 people over the period which takes the total amount of money withdrawn since the pension freedoms started in April 2015 to £17.5bn.

The data from HMRC covers “flexible payments” from pensions, which include full or partial withdrawals, flexible drawdown and buying a flexible annuity.

AJ Bell senior analyst Tom Selby says: “Three years on from the launch of the pension freedoms we are beginning to get a clearer picture of how savers are using the flexibilities.

He adds: “Average withdrawals per quarter ticked up slightly but remain well below the levels seen in the first 12 months. While there are signs some people may be taking too much too soon from their retirement pots, there is no clear evidence this is a widespread problem.”

Just Group communications director Stephen Lowe says people should be cautious about reading too much into the figures as they are not comprehensive.

He adds: “We know from other sources that the over 55s are taking large amounts of tax-free cash using flexi-access drawdown which is not included in the data reported, and nor is the tax-free cash element of uncrystallised lump sums.

“On top of this, purchases of guaranteed income for life solutions and any withdrawal from pre-2015 capped drawdown accounts are not included.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. No doubt that will help the Treasury balance the books with the increased tax receipts.

    I wonder when the public will wake up and realise they are being conned?

  2. These statistics are meaningless on their own – they are just click-bait for people like Harry with a set opinion!
    Any meaningful comparison would look at amounts withdrawn compared to amount of annuity purchase funds + drawdown withdrawals before pensions freedoms, adjusted for increases in the number of retirees and an allowance for investment growth.
    And that’s before we even get started on the fact that there are greater numbers of people taking retirement benefits under Pensions Freedoms from funds that were transferred from DB schemes (and they haven’t all been mis-sold).

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