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A record £2.3 billion has been pulled out of pension pots by savers in just three months, raising fears that the 2015 pension reforms could leave many without enough cash for retirement.
The pension freedoms, introduced by former chancellor George Osborne in 2015, allow anybody aged over 55 to take out as much cash as they as they desire from their retirement pot to reinvest, save, or spend as they choose.
The most recent figures released by HMRC have raised concerns regarding the sums of money being withdrawn, as well as the possibility that savers may be spending it too quickly; 574,000 payments were made from pensions to a record 264,000 savers during the second quarter of this year, totalling £2.3 billion. In comparison, the total in the previous quarter was just £1.7 billion, with a total of £1.9 billion over the same period the previous year.
Since the reforms, a total of £19.8 billion has been withdrawn from pensions by over four million savers. Notably, this figure only relates to the taxable part of saver’s withdrawals - not the 25% lump sum that can be taken tax-free, meaning the final total withdrawn is likely much higher.
With the average withdrawal at £9,000 per person per quarter, Henry Tapper, pensions expert at First Actuarial, believes savers are being a little too aggressive in the drawdowns.
For accurate legal advice concerning retirement planning and pensions, contact our expert team today.
