Personal Pension  

HMRC reveals £2.7bn paid out since freedoms began

HMRC reveals £2.7bn paid out since freedoms began

Providers have paid out £2.7bn since the pension freedoms came into force, according to the latest HM Revenue and Customs statistics.

A total of 146,000 people accessed their pension pots through 251,000 payments between April and September.

Over £1.5bn was paid out to 84,000 savers between April and June and just under £1.2bn to 81,000 people received between July and September.

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The figures were sparse on detail though, with no breakdown in terms of the ways which savers had accessed the money or clarity about how much had been withdrawn as lump sums or via flexi-access drawdown.

HMRC added that it had no comparative data from this time last year and could not say how much tax was collected as a result of the pension withdrawals.

In order to manage the burden on the industry, reporting was not made compulsory by the government, although this will change from April next year.

Jon Greer, pensions technical specialist at Old Mutual Wealth, commented that the government’s impact assessment of the changes announced in the 2014 Budget suggested an additional exchequer revenue of £320m for tax year 2015/16.

“The numbers published this morning, which admittedly are incomplete, suggest over £2.7bn has been withdrawn in the past six months, meaning that the full tax take for 2015/16 could be around £800m in total.

“While this figure may not actually come as a complete surprise to the Treasury, it should serve as a timely reminder to anyone looking to access their pension that one of their first considerations should be the amount of tax they may pay.”

Figures produced by The Association of British Insurers at the start of last month suggested that almost £2.5bn worth of payments have been made to customers in the first three months since the freedoms.

The trade body’s figures for April, May and June showed that £2.3bn was used to buy nearly 37,500 regular income products - either annuities or income drawdown products.

Also in September, the Financial Conduct Authority revealed that 57,568 savers aged over 55 had fully encashed pension pots as an uncrystallised funds pension lump sum since April, while 137 customers had withdrawn £250,000 or more in one go.