More People Cashing-In Small Pensions

The number of people cashing-in their pensions is rising, but the amounts are getting smaller, new figures show. In 2015 the amount withdrawn averaged almost £20,000. But in 2016 the figure has fallen closer to £10,000. This maybe because people are cashing-in smaller pensions, or because they are taking a smaller proportion of their whole pension.

The BBC reports

“Since April 2015, those aged 55 and over have been able to cash in their pension pot, assuming, in most cases, that they have not already bought an annuity (a retirement income)… In doing so, they pay no tax on the first 25% of these funds, but pay the normal rate of tax on the rest. Other options include buying an annuity or drawing down an income from their pension pot… A total of £7.6bn has been withdrawn since the rules changed. The latest figures from HM Revenue and Customs (HMRC) show that 158,000 people accessed £1.54bn from their pension pots over the last three months… This is a very similar total as the first three months after the reforms, but when only 84,000 people accessed their cash.”