Advised pension customers withdraw less than half the ABI average - Royal London
15 August 2016
Commenting on today’s ABI pension withdrawal statistics, Fiona Tait, Pensions Specialist at Royal London, said:
“The ABI figures confirm that people are acting sensibly when making pension withdrawals with only a minority in danger of taking too much, too soon. There was always a concern that people would make rash withdrawals and we are glad to see that this has so far not happened. One reason for this is the income tax levied on pension withdrawals beyond the 25% lump sum, which may act as a ‘brake’ and make people think twice before taking money out of their plan. This tax ‘brake’ acts as a useful reality check to remind people to think about how to make best use of their pension unlike, for example, the incoming Lifetime ISA which will allow people to withdraw all of their savings without penalty.
“Another important factor is likely to be financial advice. Figures from Royal London Intermediary, which only accepts new drawdown plans where advice has been given, show that the level of withdrawals is significantly lower, despite an average drawdown fund size slightly higher than the ABI average.
“While the average percentage withdrawal for the ABI was 5.63% across the first 12 months of pension freedoms, members with Royal London plans are withdrawing 2.62%. We believe this is due to advisers helping their clients to understand how much they can realistically withdraw without running out of money in the early years.
“Royal London will continue to support advisers with information and planning tools such as our Drawdown Governance Service, which is designed to identify the ongoing sustainability of income withdrawals over the lifetime of each individual drawdown plan.”
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About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with Group funds under management of £87.9 billion. Group businesses provide around 9.1 million policies and employ 3,051 people. (Figures quoted are as at 31 March 2016).