New HMRC data on flexible payments from pensions show that in Q1 2018, 222,000 individuals made withdrawals, up from 176,000 in Q1 2017 – a 26 per cent increase.
The figures show £1.7bn has been withdrawn from pension schemes during Q1 2018, an increase of just 7 per cent compared with the same time last year.
Stephen Lowe, group communications director at retirement specialist Just Group, said the very specific set of figures “don’t reflect the bigger picture”.
“They only cover taxable money withdrawn from pensions under the new rules. 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 funds pension lump sum],” he said.
Lowe added: “On top of this, purchases of guaranteed income for life solutions and any withdrawal from pre-2015 capped drawdown accounts are not included.”
Michael Martin, relationship manager at 7IM, said the numbers are concerning because despite the 26 per cent rise between Q1 2017 and Q1 2018, the total value of payments has moved fairly modestly, by just 7 per cent.
“This suggests that it is the smaller pension pots that are being harnessed the most. In other words, the gap between the pension ‘haves and have nots’ has just got even bigger, and arguably the number of people relying on inheritance or a windfall to fund later life just got bigger too,” he said.
