Pension Freedom 

Almost £2bn withdrawn from pensions in last quarter

Almost £2bn withdrawn from pensions in last quarter

Savers withdrew £1.9bn from their pensions during the final quarter of 2018, figures released today (January 25) by the HM Revenue & Customs have shown.

This meant withdrawals were up 26 per cent on the same period last year, when it was £1.5bn.

In total, £23.6bn has now been flexibly withdrawn from retirement pots since the reforms were launched in April 2015.

But the data showed people were withdrawing smaller amounts than before.

It showed the average pension freedoms withdrawals per person dropped to a record low of £7,197 in Q4 2018 – down from £7,597 in the previous quarter.

Tom Selby, senior analyst at AJ Bell, said: "While the popularity of the pension freedoms shows no signs of abating, the amount people are withdrawing from their funds per quarter has dipped to the lowest level on record.

"Although it is too early to draw firm conclusions about why this has happened, it could be a sign of people showing restraint in how they spend their hard-earned retirement pots."

He warned the FTSE 100 dropped 12 per cent in 2018, with many funds delivering negative investment returns, which could have had an impact on people investing their pensions.

Mr Selby said: "The past 12 months will have been particularly difficult for anyone who entered drawdown for the first time – especially if they took large income withdrawals just as markets hit the skids.

"Anyone in this situation has an uphill task to recover the losses they have made, and will be praying for a better year for their investments in 2019."

But Steven Cameron, pensions director at Aegon, was more upbeat about the latest figures.

He said: "The country’s love affair with the pension freedoms continues and we’re on course to see a record number of people accessing their pensions flexibly this tax year, with 448,000 people having taken money from their pension so far this tax year.

"The freedoms have changed the way people think about retirement and are enabling the rise of a more flexible transition into retirement whereby people start accessing some retirement savings to support a reduced working pattern."