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17 Aug 2016

Savers taking ‘too much´ from pension pots, warns ABI

The Association of British Insurers (ABI) has warned that some individuals over the age of 55 are withdrawing too much money from their pensions savings, BBC News reports.

According to official data, more than a year after the new pension freedoms were introduced - allowing anyone over the age of 55 to withdraw from their pension pots at will - most people appear to be being cautious about spending their savings; but there are some who aren´t.

More than half of those who withdrew money from their pension savings in the first three months of 2016 took out less than 1% of their total value.

However, some 3,379 withdrew more than 10% of their pension pots - something that the ABI is calling a “warning sign.”

While most people are taking a sensible approach, explains ABI director of policy Yvonne Braun, “the data also suggests a minority are withdrawing too much too soon from their pension pot - 4% of pots are having a tenth or more withdrawn - and many other customers are taking their entire pot in one go.”

The ABI is calling on the government to investigate the issue further, to obtain a full picture of these savers´ incomes and circumstances, and find out why they are taking out so much of their savings now.

Of course, it is likely that of those thousands of people accessing their savings now, many will be moving their money to other investments such as housing, or even into separate, smaller pension funds.

A spokesperson from the government has stated that for most people, keeping their annuity incomes was the best option. However, they noted that savers should have the option to make the decision most suitable for them.

They added: “We are working with our partners, such as Pension Wise and the Department for Work and Pensions, to ensure consumers are protected and that there is clear information to help people understand their options.”

Copyright M2 Bespoke 2016

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