The firm said the Treasury is likely to net an extra £700m this year as a result of the reforms, rather than the £320m originally forecast.

New pension freedoms rules, introduced in April, allow retirees to take their entire pension pot as a cash lump sum. However only a quarter will be tax free.

Tom McPhail, head of pensions research at Hargreaves Lansdown, said: “It looks as if the Chancellor could be in for a handy windfall, thanks to his pension reforms. It is important to bear in mind though that this will simply bring forward tax revenues and consumer spending which would otherwise have been paid out over the years and decades to come. It also underlines the importance of maintaining a stable pension system which continues to encourage and reward responsible long-term savings habits.”

HMRC data distorted

HMRC data will be distorted in the early months for two reasons, McPhail added. Firstly because many payments are taxed under an emergency tax code which results in an overpayment of tax. Pension investors can then subsequently reclaim the overpayment but it will take some weeks or months to sort out.

Secondly because many pension investors are currently being thwarted by their pension provider’s inability to comply with their payment requests.

Other variables

As well as the pent up demand from last year, and the pension investors reaching retirement this year, McPhail says some pension investors are bringing forward transactions which would not otherwise have taken place for a number of years. Uncrystallised funds payments in particular are proving popular with those in their late 50s, he noted.

Final salary scheme transfers are currently proceeding slowly due to the advisory constraints on this market, according to McPhail. In the Autumn statement the Treasury projected a £90m tax boost thanks to defined benefits transfers. So far the market is only likely to have processed a small percentage of this potential demand.