New figures released by HMRC show that the average so-called ‘pension freedom withdrawal’ has fallen from £7,597 per person to £7,197 during the fourth quarter of 2018.

This represents a record low since the pension freedom laws were introduced in April 2015. These rules banned compulsory annuities and gave those aged 55 and over full access to their pension assets, to spend, save or invest as they wish.

The data revealed that a total of 264,000 people withdrew £1.9bn from their pensions during the final quarter of 2018. Meanwhile, more than one million people have taken advantage of making withdrawals from their pension pots, totalling and £23.6bn, since the rules were introduced.

Ian Browne, pensions expert at wealth manager Quilter, said the drop in the value of withdrawals shows that initial concerns that pensioners would use their pension pots to buy fancy cars have proven to be unfounded.

“While the fourth quarter has generally seen lower values, the exact rationale for the drop is not clear, it could be people are getting used to freedoms or it could be concerns about falling markets,” said Browne.

The drop in withdrawal values could well be down to stock market volatility last year.

“Millions of savers in drawdown have faced torrid markets during 2018, with the FTSE 100 down 12% and most funds delivering negative investment returns. In these circumstances it can be sensible to cut back withdrawals in order to ensure you don’t run out of money during retirement,” explained Tom Selby, senior analyst at investment platform AJ Bell.

He added that the past 12 months will have been difficult for anyone who entered drawdown, where a variable income is drawn from your pension fund which remains invested through retirement. This is because large income withdrawals may have been just as markets started to sell off.

“Anyone in this situation has an uphill task to recover the losses they have made, and will be praying for a better year for their investments in 2019,” Selby added.