The amount of cash being withdrawn from pensions under the “pensions freedom” legislation reached an all time high in the second quarter of 2017. Between April and June this year, over 200,000 people released more than £1.86 billion, a 5% increase on last year. And the number of people withdrawing money has increased by more than 100% since 2015. Overall, more people are using the pension freedom option, but the amount each person is withdrawing is tending to get smaller, and this is taken by some experts as a sign that people are accessing their pension cash in a sensible way.
Money Observer reports –
“Commentators are viewing the trends in pension withdrawal as continuing evidence that people ‘are accessing their retirement pot in a sensible way rather than ravaging their savings to splurge on fast cars’, as Tom Selby, senior analyst at AJ Bell puts it… However, in its recent Retirement Outcomes Review (ROR) interim report, the FCA reported that ‘accessing pots early has become “the new norm”’, with 72 per cent of pots accessed by consumers under 65. Most of them took lump sums… But while the indications are that people are behaving sensibly in terms of relatively modest withdrawals, it’s still too early to understand whether these patterns are genuinely sustainable, given the length of time their pension pots may have to last.”