Pensions  

HMRC reveals £6bn accessed under pension freedoms

HMRC reveals £6bn accessed under pension freedoms

More than £6bn has been paid out from pension savings since the introduction of last year’s historic reforms, according to figures from HM Revenue & Customs.

The second quarter of 2016 saw the most activity since the launch of pension freedoms in April 2015, with HMRC figures showing £1.7bn was paid out to 159,000 people.

This was more than any other quarter since the reforms were introduced – more even than the £1.5bn paid out between April and June 2015.

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Simon Kirby, economic secretary to HM Treasury, said: “It is only right that people should have a choice over what they do with their money and these figures show that pension freedoms continue to be a popular choice.

“Our pension reforms have already given hundreds of thousands of people access and responsibility over their hard-earned savings and we will continue to make sure that the pension freedoms work well for everyone.

“We will work with our partners, such as Pension Wise and the Department for Work & Pensions, to ensure consumers are protected and that there is clear information to help people understand their options.”

Year and quarterNumber of paymentsNumber of individualsTotal value of payments
2015 Q2121,00084,000£1,560m
2015 Q3130,00081,000£1,170m
2015 Q4123,00067,000£800m
2016 Q1142,00074,000£820m
2016 Q2256,000159,000£1,770m
Total: 2015 Q2 - 2016 Q1516,000232,000£4,350m
Total: 2016 Q2256,000159,000£1,770m
NB Numbers may not add up due to rounding and number of individuals for the 2015 Q2-2016 Q1 total is less than the sum of the number of individuals for each quarter as some have taken payments in multiple quarters.

As part of the reforms, the government established free guidance service Pension Wise, which has had nearly 75,000 appointments since its launch.

Though the HMRC figures show pension freedoms have been used by 232,000 people between April 2015 and March 2016, during the same period only 58,000 Pension Wise appointments took place, meaning just one in four people accessing their savings used the service.

The number of people taking out pension savings has gone up by a higher proportion than the amount of money being withdrawn, with the 159,000 using the freedoms in the most recent quarter being almost double the 84,000 who used them in the second quarter of 2015.

This means that while the amount paid out has spiked in the most recent quarter, the average sum paid out to each individual a month has gone down to £3,710 in the second quarter of this year compared with £6,190 in the second quarter of last year.

Alistair McQueen, savings and retirement manager at Aviva, said: “The new HMRC figures demonstrate a significant spike in the popularity of pension freedoms.

“Aviva’s own insight shows the need for careful vigilance. The long-term interests of all savers must be protected.

“Money is tight for many, and the demands on our finite resources – savings and property – are great. Freedom, choice and popularity is to be celebrated, but savers must be supported to ensure their enthusiasm today does not damage their ambitions for tomorrow.”