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15 Jul 2015

UK savers have withdrawn nearly £2 billion from their pensions

New figures have revealed that since the pension reforms came into force in April this year, British savers have taken more than £1.8 billion out from their retirement savings, Reuters reports.

According to figures from the Association of British Insurers (ABI), nearly a quarter of a million payments were made between April and May alone, almost immediately after the changes were introduced.

At the same time, £1.3 billion was put towards buying some 22,000 regular income products; more than 50% of which was put into income drawdown products, as opposed to annuities.

The government made substantial changes to the pensions system earlier this year when it introduced higher tax-free saving thresholds and removed compulsory annuity purchasing. Despite also setting up a free guidance advice service, Pension Wise, many in the industry feared that savers would be at risk of mismanaging their money.

The insurance trade body found that since April, savers with smaller pension pots had been taking their money out as cash, while those with larger amounts saved up were purchasing income drawdown to help sustain an income in their later years.

Yvonne Braun, director for long-term savings policy at the ABI, called the findings “an important reminder that tens of thousands of people are successfully accessing the pension freedoms as intended.”

Commenting on the areas for concern, she added: “We are just three months into the biggest overhaul in pensions for a generation which was introduced in only one year, so some issues remain that need to be worked through, in particular around financial advice.”

Copyright M2 Bespoke 2015

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