Consumers have accessed almost £13bn since the pension freedom reforms were implemented in 2015, the latest government data has shown.
Data published in July for the two-year period since the second quarter of 2015 showed £12.7bn has been accessed flexibly so far – £1.86bn of that in the second quarter of this year alone.
Documents published alongside the spring Budget showed the government had raised nearly five times more income tax than expected in the first year of pension freedom.
However, the average withdrawal per person reduced from £11,132 in the second quarter of 2016 to £9,300 in the corresponding period in 2017. At the same time the average number of payments per person were up, from 1.86 to 1.97.
This indicated more people are setting up regular withdrawals, according to provider AJ Bell, whose senior analyst Tom Selby said: “The pension freedoms continue to be hugely popular, with evidence suggesting most people are accessing their retirement pot in a sensible way rather than ravaging their savings to splurge on fast cars.
“While the evidence so far is encouraging, the FCA will need to keep a close eye on the market to ensure consumers continue to manage their withdrawals in a sensible, sustainable manner.”
‘Politically irreversible’
Implemented in 2015 by then Chancellor George Osborne, the pension freedoms allowed people over the age of 55 to access their savings flexibly, without being forced to take out annuities.
Pensions minister at the time and now director of policy at provider Royal London, Steve Webb, said: “These figures show that more and more people every quarter are taking advantage of the new pension freedoms. From under 100,000 in the second quarter of 2015, the number has more than doubled in two years.
“Any future government would find it politically impossible to reverse this policy, which is now a significant part of the retirement planning of large numbers of people. The priority for regulators must be to ensure people are given the right guidance and advice to make best use of these freedoms.”
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