This is an increase on the same period last year, when 158,000 people withdrew £1.54bn, but a small decrease on the previous quarter when 200,000 people took out £1.86bn.

Research by AJ Bell found that demand for pension freedoms has been driven primarily by people wanting control over their retirement savings, with half the people questioned (52%) giving this as a reason for not purchasing an annuity. The low income available from annuities is also a major contributing factor for 30% of people.

Just over three quarters (78%) of people questioned said they felt in control of their retirement income, although almost half (46%) of respondents said they worry about running out of money.

There remain some basic misunderstandings. For example, over half (53%) of those questioned don’t know how their pension fund is invested and a quarter (26%) never review the amount they are withdrawing.

Tom Selby, senior analyst at AJ Bell, said: “UK pension savers clearly want more control over their retirement savings and the pension freedoms have been remarkably successful at delivering this. However, in return for this control they have taken on the investment and longevity risk that previously would have sat with annuity providers. This trend has significant long-term implications which we are yet to see play out.

“To control investment risk people need to have a clear investment strategy and yet over half don’t know how their pension fund is invested. To control longevity risk people need to have a realistic idea of how long they will be able to sustain their withdrawals for, yet a quarter of them never review the amount they are withdrawing…it is vital the government, regulators and the industry continue to monitor the progress of the pension freedoms and communicate with savers to give them a better understanding of retirement issues.”

Good decisions?

Rachel Vahey, product technical manager at Nucleus, said that while the stability of the amounts being withdrawn gives a sense of calm, the steady increase in the number of times people are dipping into their pension pots raises concerns: “This may lead to the risk many withdraw funds when they have no immediate need of them, unnecessarily paying tax, and investing them in bank accounts or ISAs. The challenge facing the government, regulators, financial advisers and the industry is to help people understand when and how to take their pension savings, and to make good financial decisions to maintain their financial health throughout retirement.”

Nathan Long, senior pension analyst at Hargreaves Lansdown, said: “The period following the pension freedoms has been one of rampant stock market returns, so many investors new to drawdown may never have fully experienced a drop in the value of their investments.

“For most people, having sufficient guaranteed income to cover the retirement essentials will be a sensible choice. State and final salary pensions are the obvious sources of secure income, but annuities are a useful top up. Annuity rates remain suppressed due to the prevailing low interest rates, yet have leapt by 16% since last September. You now get more for your money than a year ago, meaning now could be a great time to revisit your long-term retirement plans.”