Retirement savers have accessed approximately £14.2 billion through the pension freedoms since the pension reforms were introduced in April 2015, according to data from HM Revenue and Customs (HMRC).
Its Flexible payments from pensions: October 2017 report also found that the number of individuals who have received flexible payments from their pensions between the second quarter of 2017 and the third quarter of 2017 is 291,000, compared to 232,000 individuals who received a flexible payment from their pension pot between the second quarter of 2015 and the first quarter of 2016. Since pension freedoms were introduced in April 2015, 916,000 individuals have accessed their pension for flexible payments.
Between April and September 2017, 838,000 payments were made from pension pots, compared to 516,000 payments made between April 2015 and March 2016.
During July to September 2017, 435,000 payments were made by 198,000 individuals, totalling £1.59 billion. This compares to 403,000 payments made in the second quarter of 2017, which were made by 200,000 individuals and amounted to £1.86 billion. In January to March 2017, 381,000 payments were made by 176,000 individuals, totalling £1.59 billion.
The figures are based on data reported to HMRC. Reporting was optional up to April 2016, when it was made compulsory. For this reason, figures prior to this are not comprehensive.
Nathan Long, senior pension analyst at Hargreaves Lansdown, said: “Keeping [a] pension invested [while] drawing either lump sums or a regular income continues to grow in popularity, so it is no surprise that the value and number of people taking flexible payments has increased. This will be a boost to the Treasury and bizarrely may stave off any further tinkering to pension allowances and reliefs in the forthcoming Budget.
“This further evidence will surely feed into the Pension Select Committee’s enquiry into the success of pension freedoms. On the one hand pensions have never been more popular as retirees’ craving for control is met, on the other it is no good watching money run out prematurely, albeit [while retirees are] being the [masters] of [their] own destiny.
“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. [Individuals] now get more for [their] money than a year ago, meaning now could be a great time to revisit long-term retirement plans.”