On the go: The Treasury’s pension freedoms tax bonanza continues, as record sums are being withdrawn.
Today’s HM Revenue and Customs figures show 585,000 withdrawals were made by 258,000 people in the third quarter of 2018, with total withdrawals in the quarter reaching nearly £2bn.
In the three and a half years of pension freedoms, nearly 5m withdrawals have been made by over 1.3m people, totalling £21.6bn.
Commenting on the latest data, Andrew Tully, pensions technical director at Canada Life, said: “Cash is king as the rush to withdraw money from pensions following the introduction of the freedoms shows no signs of abating. Quite the opposite in fact, as the latest official figures show Treasury expects to receive an additional £400m in tax receipts from flexible pension withdrawals this year.”
But Stephen Lowe, group communications director at Just Group, warns: “Investing in a pension drawdown product is not for the faint hearted – it’s complex and can be risky. So we should be concerned that the Financial Conduct Authority revealed that people did not get financial advice on nearly a third of pots that entered drawdown, and sales without advice reached a post-freedoms high in Q2 2018. Many people are sleepwalking into drawdown without the benefit of regulated financial advice.”
Nathan Long, senior pension analyst at Hargreaves Lansdown, is more sanguine: “Retirees continue to manage their money sensibly, as an increase in the number of pension withdrawals masks the fact that the value of each withdrawal has now stabilised at between £3,000 and £4,000. Many of these withdrawals are now courtesy of the retire-as-you-go generation drawing on their pension again and again for long-term income as their lifestyle dictates.”
