On the go: The UK’s fondness for pension freedoms continues unabated with £1.9bn withdrawn from pension schemes under flexible pension rules in the fourth quarter of 2018, according to the latest HMRC figures published on Friday.
With £7.8bn withdrawn in 2.3m payments through the year to date, 2018 has exceeded 2017 on both counts, by £1.3bn in withdrawals and 614,000 payments.
Commenting on the statistics, Steven Cameron, pensions director at Aegon, said: “We’re on course to see a record number of people accessing their pensions flexibly this tax year, with 448,000 people having taken money from their pensions so far this tax year. Since they were introduced, more than 1m people have taken flexible payments. That’s nearly equivalent to the population of a city like Birmingham.”
But Alistair McQueen, head of savings and retirement at Aviva, pointed out: “There is no evidence of an uncontrolled ‘dash for cash’, as was feared by some when the freedoms were introduced. The 2018 figure of £7.8bn needs to be seen in the context of a total private pension wealth in the UK of approximately £5tn. Withdrawal payments have also consistently averaged less than £4,000 since summer 2017, showing little evidence of savers rushing to buy Lamborghinis!”
The HM Revenue & Customs statistics do not tell the whole story, warned Stephen Lowe, group communications director at Just Group: “Billions of pounds of tax-free cash payments are not included in these figures, nor are many other pension withdrawals, such as small pot withdrawals or purchases of guaranteed income for life solutions. Nor do the figures tell us how many individuals have withdrawn money, how much they have withdrawn or how often.”
He concluded: “There is nothing in these figures that ought to make us believe everyone making pension withdrawals properly understands the tax implications of their actions, the restrictions they are now subject to, or the longer-term consequences of withdrawing money.”
