Britons are continuing to take advantage of pension freedoms introduced more than a year ago, according to figures published by the United Kingdom tax authority on Thursday.
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The pace of withdrawals accelerated in the three months to June, with 159,000 taking advantage of the new flexibilities to get hold of £1.7 billion that would otherwise have been locked in more fixed arrangements.
In all over £6bn has been accessed across 772,000 since the reforms launched in April 2015. However, it prompted warnings of irresponsible behaviour that could leave savers falling…
People over the age of 55 are no longer required to buy an annuity – a lifetime income from an insurer – and can instead spend their retirement savings as they wish.
A recent “surge” of nearly 160,000 older savers accessing their pensions using the Government’s new freedoms has pushed the total amount withdrawn since they were introduced above £6bn, data reveals.
Announcing the news, the economic secretary to the Treasury Simon Kirby reaffirmed the government’s commitment to ensuring that Britons have a choice over what they do with their money, noting that “pension freedoms continue to be a popular choice”.
Selby urged policymakers to remain “vigilant to the risk people withdraw too much too quickly”.
The government is also giving people the right to sell income from their annuities from April 2017, subject to agreement from their annuity provider.
There are also plans afoot to protect customers by capping early exit fees – a great way to encourage more choice and freedom in the pensions sector – as well as allowing earlier access to Pension Wise guidance, and an industry-wide pensions dashboard could also be on the cards, too.
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Although the government announced plans earlier this year to cap exit fees for savers, it stopped short of introducing tighter rules to prevent scam activity, continuing to rely exclusively on educational anti-scam campaigns. “Many of these investors are using their existing pension provider simply because it is the most available solution; if they don’t shop around they may miss out on better deals and services which are available elsewhere”.
