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A total £1.59bn was flexibly withdrawn in Q1 2017, the most in any quarter since Q2 2016 and the second-highest figure seen.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.
Flexibility would appear to appeal more to those with bigger pension pots. there is a strong correlation between a larger pot and greater flexibility – of those with pension savings of up to £50,000, around 40% accessed their pension flexibly and 41% opted for a guaranteed income.
Of those with pots of £150,000 and more, however, 66% chose to access their pension flexibly, while just 26% chose a guaranteed income.
Pension freedom also highlight a generational difference of opinion. Some 55% of baby-boomers have or plan to access their pension flexibly, in comparison to 39% of millennials.
“There is lots of evidence that millennials are pessimistic about their financial prospects and our results consistently show this translates into relative risk aversion compared to baby-boomers.”
According to Aegon, since the introduction of pension freedom, 5.5 million UK savers – that is, 14.1% of the UK population – are now saving more into their pension, and a further 15.3% realise they need to plan better for retirement.
Two years on and all the signs point to the pension freedoms having paved the way for a smoother road to retirement – people have moved up a gear, saving more and becoming more engaged with their pensions.”
AAC Director- Dave McConnell stated- Cautions must be the order of the day, advice should be sought to at least discuss the options available or HMRC may take a big slice in unnecessary tax- good planning is vital.
The 2015 pension reforms put many more retirees in the driver’s seat for the first time however they still have their “L plates “on with regards to pension knowledge which may is some circumstances end in a car crash.