More savers using pension freedoms as withdrawals hit £6.5bn but individual amounts shrinking

The data from HMRC covers “flexible payments” from pensions, which include full or partial withdrawals, flexible drawdown and buying a flexible annuity.

The data shows that the total amount of money withdrawn since the pension freedoms started in April 2015 now stands at £15.7bn.

However, on a quarterly basis, while nearly 200,000 people took payments from their pension in the fourth quarter of 2017 (up from 162,000 in Q3), the total amount withdrawn stood at £1.5bn, which is slightly lower than £1.59bn taken out during the previous quarter.

The HMRC figures show the average withdrawal per person in 4Q17 was £7,596 ($10,618, €8,655).

This is almost £2,000 lower than the 4Q16 average of £9,630.

The reduction of the amounts withdrawn by individuals was pointed to by analysts as evidence that savers are not carrying out reckless raids on their pension pots.

Tom Selby, senior analyst for AJ Bell, said the drop in withdrawals continues a downward trajectory.

He said: “While this is not, in itself, evidence that savers aren’t at risk of making unsustainable withdrawals from their pensions, it equally isn’t a smoking gun requiring emergency regulatory or government intervention.”

He said any government intervention in flexible payments needs to be based on evidence, rather than rhetoric.

“The sustainability of withdrawals and consumer engagement are central in the Retirement Outcomes Review.

“Indeed, our own research suggests many savers are entering drawdown simply to take their tax-free cash, without thinking properly about where their money is invested or how and when they are going to draw an income.

“Boosting engagement therefore needs to be a priority for policymakers across the FCA, Treasury, the and ,” Selby said.

Hargreaves Lansdown senior pensions analyst Nathan Long agreed.

He said: “Rather than use pensions to splurge on an extravagant Christmas, retirees have operated restraint when managing their pensions showing the new rules are bedding in nicely and the amount being withdrawn is stabilising.

“The number of payments made has increased, but this is simply a reflection of more and more people using drawdown for their income in retirement.”

He adds: “The fact the rate of growth is slowing actually shows that the dash for cash is abating and retirees are facing up to managing their pension pot to provide for their life after work.”