Pension Freedom Cash Withdrawals Reducing

HMRC reports show that the value of cash being withdrawn from pensions, under the new Pension Freedom regulations, is continuing to slow down. Around £1.5 billion was cashed-in during the 3rd quarter of 2016, compared to £1.8 billion during the 2nd quarter.

MoneyMarketing reports

‘Though the number of individual payments out increased from 296,000 to 324,000, fewer people accessed their pots; 158,000 in the third quarter compared with 159,000 the quarter before… The average withdrawal per person has now fallen to just under £10,000 and has been in steady decline since the quarter immediately following pensions freedoms, when average withdrawals were around £19,000…AJ Bell senior analyst Tom Selby says: “It is interesting that the average withdrawal per person has gradually reduced since the launch of the freedoms, suggesting the initial dash for cash has tailed off and people are becoming more realistic about a sensible withdrawal level over time… However, an average withdrawal rate of £10,000 per person in a quarter still feels high in relation to the average pension fund size of around £40,000 in the UK.  This shows the limitations of this data.  To get a full picture of how successful the pension freedoms are it would be good to see what these withdrawals are being used for and to have some sense of how much people have remaining invested in pensions.”’