UK pension withdrawals hit record due to ‘freedoms’

News


01 Aug, 2018

UK pension withdrawals hit record due to ‘freedoms’
 
More than £2.27bn was withdrawn through the UK’s pension freedoms by 264,000 individuals in the second quarter of 2018 – the highest amount since the freedoms were introduced in 2015, HMRC has revealed.

In its latest report, the UK tax authority shows that the number of payments increased from 500,000 in Q1 2018 to 574,000 in Q2 2018, a jump from the 381,000 payments made in Q1 2017.

The data highlights that around £19.7bn has been taken out by 1.26 million individuals in 4.27m payments since the launch of the ‘freedom and choice agenda’.
 
Research from Prudential, published in July, discovered that around 10 per cent of this year's retirees intended to take their entire pension pot as a lump sum, despite the tax implications.
 
Whilst many professional advisers are anti the ‘freedoms' for a variety of reasons, a campaign has been launched in recent weeks calling on the government to revise the rules in order to extend the policy to people who retired before April 2015.
 
According to the ‘Your Pension, Your Choice' campaign, some five million pensioners who retired before April 2015 do not have the same pension freedoms as those who retired after the policy was introduced.
 
A cross-party group of MPs, led by Scottish Conservative MP Paul Masterton, have launched an early day motion in the UK parliament.
 
Mr Masterton said: “Freedom and choice was a revolutionary pension policy which allowed individuals greater flexibility to tailor how they received retirement income to better fit their circumstances, but the government has backtracked on a promise to extend that ability to individuals who retired before the changes came into place - more than five million people are losing out on the ability to access their pension pots in the way they please.”
 
For his part, Nigel Green, deVere founder and CEO, has said previously: “In general terms, our advice is to resist, where possible, the temptation to access pensions to avoid the risk of compromising your retirement ambitions, making hasty decisions, and facing hefty tax charges.”