Record £2.3bn taken from UK pensions between April and June

A record £2.3bn was withdrawn from pensions in the first quarter of the tax year, according to statistics from HMRC, the largest sum since pension freedoms was introduced in Britain.

Around 264,000 people withdrew an average £3,950 from their pensions between April and June. This figure highlights a significant increase from the total value of £1.7 billion of flexible payments made to 222,000 people in the first quarter of this year, the report shows.

Over the past year, some 375,000 people have withdrawn a total of £6.65bn.

Since the introduction of the freedoms in 2015, the number of payments made in a quarter has quadrupled from 121,000 to 574,000.

Overall, 3.7 million withdrawals have been made totalling £17.5 billion between April 2015 and June 2018.

“These figures are quite narrow in that they only cover taxable money withdrawn from pensions under the new rules – they don’t include the release of tax-free cash early in retirement which the Financial Conduct Authority has called ‘the new norm’, and tell us nothing about when the cash is being released and whether it is being used for retirement or other purposes.

“We need to remember that small pension pots can make all the difference to raise peoples’ monthly living standards. Our analysis shows it only takes a pension pot of around £14,000 to lift a single retiree, in receipt of State Benefits, above the Joseph Rowntree Foundation’s Minimum Income Standard, the lowest income people think provides an acceptable standard of living,” Stephen Lowe, group communications director at Just Group, said. (continues…)

Pedro Gonçalves
Pedro Gonçalves is Financial Correspondent at International Investment.

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