FT Adviser reports that there was a 21% increase in the amount of funds being withdrawn from individuals’ pensions in the second quarter of 2019, reaching a new record. The data, published by HM Revenue & Customs, showed that £2.75bn was withdrawn from pensions flexibly in this period, up from £2.27bn in the same period the previous year.
A record 336,000 savers accessed their pension flexibly in this period, withdrawing an average of £8,200. This is compared to 264,000 people who dipped into their pension pot in the same period last year, taking an average of £8,600 per person.
Since the introduction of the pension freedom rules in 2015, which allow those aged over 55 to access their pension income without having to purchase an annuity, more than £28bn has been withdrawn from schemes. Each person has made an average of six withdrawals.
However, there are concerns that many consumers are not equipped to access their pensions themselves and that the pensions industry needs to address this issue. There is also a risk that people could run out of money if they withdraw too much.
- Pension withdrawals increase: There has been a 21 per cent increase in the amount of funds being withdrawn from individuals’ pensions in the second quarter of 2019, reaching a total of £2.75bn and a record number of 336,000 savers.
- Pension freedom rules: Those aged over 55 can access their pension income flexibly without having to purchase an annuity, which has led to more than £28bn being withdrawn from schemes since 2015.
- Advice and guidance needed: Many consumers are making decisions about their pension without taking advice or guidance, which could pose a risk of running out of money or paying more tax than necessary. The pensions industry needs to support them with good guidance and encourage them to seek advice.