More than 230,000 retirement savers took more than £4.3 billion from their pensions under flexible freedom rules during the past 12 months.
The measures were introduced on April 6, 2015 to give retirement savers over 55 years old the chance to withdraw cash from their pensions to spend how they liked.
HM Revenue and Customs (HMRC) says more than 232,000 people drew cash or bought a flexible annuity with their pensions between April 6 last year and March 31.
More than 516,000 cash withdrawals were recorded at an average of £833 each.
More pension reforms on the way
The data comes from pension providers who reported the information about customers direct to HMRC.
In the first quarter of 2016, 74,000 retirement savers took £820 million from their pensions, a slight increase on the 67,000 people who withdrew £800 million in the last three months of 2015.
Economic secretary to the Treasury Harriett Baldwin said: “Tens of thousands of people took the opportunity to access their retirement savings during the first year of our successful pension freedoms.
“It’s their money so they should have the choice about how they spend the cash.
“Our plan is to make sure this scheme works well for consumers and that they can access clear information that helps them make sensible financial decisions.”
The government has not yet finished with pension reforms.
Challenge for retirement savers
Chancellor George Osborne has spoken out against ‘rip-off exit fees’ some providers charge savers to switch to another firm or take their money early from a pension. Legislation is on the way to cap these charges.
From April 6, 2017, a secondhand annuity market will give pensioners a buy-out clause for policies that pay meagre returns.
Financial firms explained that the first year of pension freedoms was focussed on telling retirement savers about their choices and needs to shift to helping them look after their money.
Richard Parkin, Head of Pensions at Fidelity International, said: “The challenge facing the over 55s is how to manage their retirement savings to make sure their money lasts. The average man aged 55 still has around 30 years to enjoy.
“People need to think about the long term rather than how they can benefit from a spending quick-fix today.”
