On the go: More retirees than ever are withdrawing money from their pension pots as the popularity of freedom and choice continues unabated.
Some 336,000 people took £2.75bn out of their pensions in the second quarter of 2019, according to latest HM Revenue and Customs statistics.
This represented a staggering 27 per cent increase in the number of individuals accessing their pensions, with withdrawals also up 21 per cent on last year. In total, more than £28bn has been flexibly withdrawn from pensions since the freedoms were introduced in 2015.
Total withdrawals in the second quarter of the year are typically larger than in other quarters, as some taxpayers plan their withdrawals around the start of the new tax year. Each person made on average two withdrawals in cash in just three months.
The average amount withdrawn per individual in Q2 2019 was £8,200, slightly down from £8,600 during the same period in Q2 2018. Since reporting became mandatory in Q2 2016, average withdrawals have been falling steadily and consistently, with peaks in the second quarter of each year.
Commenting on the statistics, Andrew Tully, technical director at Canada Life, said: “These record numbers show just how much is being paid out on a regular basis which people will be paying tax on, which might be positive for HM Treasury but is probably not the most efficient way to access your pension.”
He added that the low use of financial advice means savers are exposed to a range of risks, including erosion by inflation and running out of money.
Tom Selby, senior analyst at AJ Bell, is more sanguine: “On the whole the available evidence points to savers acting in a sensible manner, taking steady incomes from their funds rather than raiding their nest eggs and splurging in a way which could leave them struggling in later life.”
