Pension freedom withdrawals cut through £10bn barrier

• Tom Ellis

More than £10bn has been accessed flexibly since the introduction of pension freedom in 2015, the latest HM Revenue & Customs statistics have shown.

A total £1.59bn was flexibly withdrawn in Q1 2017, the most in any quarter since Q2 2016 and the second-highest figure seen. More than 390,000 flexible payments were made in the quarter.

The first quarter of 2017 also saw the highest number of individuals access their pensions flexibly with 176,000 people doing so - 14,000 more than the previous high of 162,000 in the last quarter of last year.
However, despite the high total amount withdrawn in the latest quarter, average withdrawals per person have continued to fall - a trend seen since pension freedoms' introduction in April 2015.
The average amount of money withdrawn per person was £18,571 in 2015 Q2 and has since plummeted to £9,034 in Q1 2017, as shown in the graph below (provided by AJ Bell).

Source: HMRC

AJ Bell senior analyst Tom Selby said: "The pension freedoms have clearly been hugely popular, with HMRC figures suggesting well over £10bn has been accessed flexibly in the first two years of the reforms. Given industry reporting was optional in 2015/16, it's likely the actual figure is significantly higher.
"It is interesting to note that the average withdrawal per person continues to trend downwards, standing at just over £9,000 in Q1 2017. Hopefully this is indicative of savers managing their retirement incomes sensibly and making withdrawals at levels that will be sustainable over the long term."