Nearly 1,800 people a day are accessing their retirement savings under new pension freedoms, according to the latest official figures.
HM Revenue and Customs (HMRC) reported that in the third quarter of this year, 158,000 people withdrew £1.54 billion from their pensions.
The figures showed a slight reduction on the second quarter, when £1.77 billion was taken out of pensions by 159,000 people.
Since the new measures were introduced in April 2015, retirement savers aged 55 and over have taken £7.65 billion from their pensions in 1.1 million withdrawals.
Economic Secretary to the Treasury, Simon Kirby, said: “The figures prove that allowing people to do what they with their hard-earned savings, whether it’s buying an annuity or taking a cash lump sum, is the right thing to do.
Popular choice
“The freedoms remain a popular choice as people consider the different ways to fund their retirement.”
Kirby also praised the work of the government’s free pension advice service Pension Wise.
He revealed that more than 90,000 people had discussed their pension savings with advisers while the service’s web site had recorded over 3 million visits.
HMRC statistics count flexible pension payments, but not pensions where the retirement saver took a 25% lump sum and went on to take regular monthly payments or to buy an annuity.
Pension industry experts have pointed out that flexible pensions have triggered a tax bonanza for the government.
Tax bonanza won’t last
“Government forecasts are that tax-take from pension freedom would increase by 50% this year and they seem to be on track to achieve that. In fact, given last year’s tax take was estimated to be £200 million ahead of target, government appears set to significantly exceed its forecasts again,” said Richard Parkin, head of pensions policy at Fidelity International.
HMRC estimates retirement savers have paid £3.3 billion on pension withdrawals so far this year.
Parkin warned that taxing pension withdrawals had a limited shelf life for The Treasury.
“Reports from the Office of Budget Responsibility showed that the effects of this policy, while positive in the medium term, will be felt in future years in the form of lower tax receipts. The more government collects from this policy today, the less it will do so in the future,” he said.
