Quarter of a million use pension freedoms in year one

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Around a quarter of a million people accessed their pensions using the Government’s freedom rules in the first year of the reforms.

According to HMRC stats published today over 230,000 savers withdrew £4.3bn in the year to April 2016.

In the first quarter of this year £820m was withdrawn from pots, up from £800m in the last quarter of 2015.

But the pace of withdrawals has slowed considerably since the reforms took effect.

Between April and June 2015 £1.6bn worth of payments were made before falling to £1.2bn in the next quarter.

HMRC’s figures cover partial or full withdrawals, income taken from drawdown accounts or buying a ‘flexible’ annuity.

Economic secretary to the Treasury Harriett Baldwin says: “It’s only right that people should have a choice over what they do with their money and in their first year our successful pension freedoms have already given thousands of people access and responsibility over their hard-earned savings.

“We will continue to make sure that the pension freedoms work well for everyone, including through working with our partners to ensure consumers are protected and that there is simple information to help people understand their options.”

Just Retirement group communications director Stephen Lowe says: “Putting these figures together with the ABI’s recent pension freedom statistics, a picture is starting to emerge.

“Those with smaller pensions are more likely to be taking cash payments. Lump sums are also popular with those aged between 55 and 60 who account for half the cash being taken this way.

“Overall £4.3 billion has been taken out of the pensions environment yet we still don’t know is whether people are prioritising short-term consumption above long term income needs. The likelihood is that most people are acting sensibly but that a significant minority will end up regretting taking too much too soon.”

HMRC