Savers have used pension freedoms a record number of times to draw cash from their retirement funds, according to official figures.
HM Revenue & Customs keeps a tally of how much money retirement savers take from their pensions and says 500,000 flexible access payments were taken in the first three months of 2018.
The number is up 46,000 from 454,000 withdrawals in the last quarter of 2017.
HMRC also disclosed 222,000 retirement savers withdrew £1.7 billion from their pensions in the quarter – a new record for individuals accessing their funds under pension freedom rules.
The rules were introduced in April 2015 and have seen the number of people, withdrawals and cash taken gradually increase.
Consistent trend
When pension freedoms started, 84,000 people made 121,000 withdrawals totalling £1.6 billion.
Retirement savers have taken almost £17.5 billion under flexible access from their pensions since the freedoms started.
Currently, the average withdrawal is £7,644.
“The value of payments in each year follows a consistent trend of increased withdrawals towards the start of the year and lower withdrawals in the remaining three quarters of the year,”says the HMRC report.
But some experts are warning the HMRC figures are only represent part of the cash withdrawn under pension freedoms by the over 55s.
Too much, too soon
Stephen Lowe, of annuity provider Just Group, said: “These are a specific set of figures that don’t reflect the bigger picture.
“They only cover taxable money withdrawn from pensions under the new rules. We know from other sources the over-55s are taking large amounts of tax-free cash using flexi-access drawdown which is not included in the data reported, and nor is the tax-free cash element of uncrystallised funds pension lump sums.”
“Average withdrawals each quarter ticked up slightly but remain well below the levels seen in the first 12 months of pension freedoms,” said Tom Selby, a senior analyst at AJ Bell.
“While there are signs some people may be taking too much too soon from their retirement pots, there is no clear evidence this is a widespread problem. Indeed, many remain concerned that ‘reckless conservatism’ where people take too little from their funds and struggle to make ends meet could prove to be just as significant a problem.”
HMRC will publish the next data set in July 2018.
