Retirement savers have switched £60 billion in to cash from pensions in the past three months, according to the latest official data.
More than 390,000 savers have taken advantage of pension freedoms to access their cash since the scheme started in April 2016.
And the number of savers taking money from pensions and the amount of cash they are withdrawing is growing each year.
In the first year of pension freedoms, 80,000 savers withdrew an estimated £12 billion, says The Pensions Regulator (TPR), which provided the data.
The following year, the number of savers withdrawing money increased by a quarter to 100,000, who drew down £14 billion.
Huge interest in pension freedoms
In the last financial year, the data shows 210,000 retirement savers cashed in £34 billion – billions of pounds more than in the previous two years combined.
Steve Webb, director of policy at Royal London asked for the data with a freedom of information request.
“These figures show the continuing huge interest in using pension freedoms to access pension rights in a more flexible way,” he said.
“Although the volume of transfers has probably passed its peak, large numbers of people are still interested in seeing whether reshaping their pension benefits would be in their interests. It remains the case that staying in a direct benefit scheme will be the right answer for most people, but there may be individual reasons why a different combination of pensions would give a better outcome.
“In such cases it is vital that there continues to be a supply of impartial and expert financial advice for those considering making such a big decision.”
£480 million overpaid in tax
Meanwhile, HM Revenue & Customs has refunded a record £46.8 million to 17,000 retirement savers who overpaid income tax accessing their pension cash in the past three months.
This follows HMRC repaying 12,500 savers £31.1 million in the previous quarter.
In total, HMRC has repaid £480 million to retirement savers since pension freedoms started.
“It’s a scandal that people legitimately accessing their own money are routinely overtaxed for the convenience of HMRC. Thousands of people have to fill in complicated forms each month to reclaim tax that they should never have paid,” said Webb.
“The numbers are reaching epidemic proportions and the new government should address this as a matter of priority.”