You are here: Home - Retirement - Retirement planning - News -

Sensible retirees are using pension pots wisely

0
Written by:
26/07/2017
Retirees are approaching pensions freedoms sensibly, rather than splashing their pension pots on fast cars or exotic holidays, according to statistics from HMRC.

The statistics show that £12.7bn has been withdrawn from pensions flexibly since April 2015. After an early burst, the average withdrawals per person has dipped. It now sits at £9,300, compared with £11,132 in the second quarter of 2016.

Equally, the average number of payments per person is up from 1.86 to 1.97, suggesting more people are making regular withdrawals from their pension pot, rather than taking cash lump sums.

Tom Selby, senior analyst at AJ Bell, said: “Based on this data we’ve seen, it is getting to a stage where things are levelling off. People are using the freedoms in a sensible way and thinking about how they can make their payments last a long time rather than taking it all out in one go.”

He added that there had been an initial spike in withdrawals, reflecting pent-up demand between pension freedoms being announced and coming into effect. This created a bottleneck. He said data in the early years was also limited as reporting had not yet become mandatory.

These figures do not say what is being done with the payments once they are withdrawn. In its recent Retirement Outcomes Review, the Financial Conduct Authority found that accessing pots had become the ‘new norm’, with over half of pots being fully withdrawn. The Review also didn’t find any evidence of retirees squandering their pension with most consumers who withdrew their savings having other sources of income in addition to the state pension.

However, Selby said there remains a need for more information. He added: “We still need much clearer data on the sustainability of withdrawals from pension funds. We need more granular detail. The FCA is starting on that analysis now, but in the meantime, we don’t have a full picture.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
90 Day Notice savings account offers 1.40%

Al Rayan Bank has launched its 90 Day Notice Account with an expected profit rate of 1.40%, securing its place...

Close