British retirement savers have withdrawn an astonishing £18.75 million a day from their pensions since spend-it-as-you-like rules were introduced.
The government opened the pension treasure tests of over 55s in April 2015 and since then 1.35 million savers have stripped their funds of £32.97 million in cash under easy access arrangements, according to the latest data from HM Revenue & Customs.
One pension provider is warning even more money is likely to fly out of funds as a record 9 million retirement savers will pass their 55th birthday milestone in the next 10 years.
Alistair McQueen, head of savings and retirement at Aviva said: “The pension freedoms continue to break records, exceeding expectations, as 1.34 million individuals have so far decided to take advantage of their greater flexibilities.
Peak for freedoms yet to come
“However, the peak for pension freedoms are yet to come. In the coming decade a record 9 million people are set to enter the arena of the pension freedoms at age 55. This is more than we can expect to see in any decade that follows.
“The 2020s are likely to see ‘peak pension freedoms’.
“With pension freedoms’ popularity continuing to grow and savers being entrusted with increased individual responsibility, it is worrying that 94% of adults are flying solo, not seeking any financial advice each year.3
“Last week, the Money and Pensions Service launched its strategy with a vision of ‘everyone making the most of their money and pensions’. This is the right vision, but they need the support of the industry, regulator and government if we’re to close the advice gap.”
No rush to take money
McQueen also cautions that although access to pension money is available at 55, there’s no need to rush into taking the money.
“Your time in retirement may be longer than ever before. Act in haste and you may repent at leisure,” he said.
“ And think about tax. Nothing is certain, but death and taxes. Income tax follows us through our working life and into retirement. The way in which we access our pension savings can have significant implications for our tax bills, and income in retirement. With consideration, tax can be less taxing.”