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Sharp fall in number of people cashing in their pension pots

Written by: Paloma Kubiak
The number of savers who withdrew their entire pension pot fell significantly between October and December 2015, while annuity purchases also dropped, data from the financial regulator reveals.

According to the Financial Conduct Authority (FCA), a total of 127,094 pension pots were accessed by consumers to either take an income or fully withdraw their money as cash in the final quarter of 2015.

This represents a big drop of 36% from the 197,443 that were accessed in the preceding three months to September.

Of the near 128,000 pots accessed, 21,289 annuities were purchased, a fall of 9% from the previous quarter statistics of 23,385.

And 65,610 pension pots were raided as new customers fully withdrew their cash holdings. The FCA said this was a decrease of 42% from the previous quarter of 113,100.

This quarter, 37,150 new drawdown policies were entered into and not fully withdrawn.

The FCA data tracks and monitors changes in the market in light of the pension freedom reforms which were introduced in April 2015.

It said that since pension freedoms came into effect allowing over 55s unfettered access to their pension savings, it has seen a “gradual decline in the total number of pension pots being accessed for the first time each quarter”.

The first quarter of the freedoms (April 2015 to June 2015) saw the greatest level of activity, with almost 220,000 pots accessed.

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