New figures published today by HMRC show that a total of £30 billion has been withdrawn ‘flexibly’ from pensions, taking advantage of the new ‘pension freedoms’ introduced in 2015. But the average amount taken out each quarter per person has fallen again and now stands at £7,250.
The quarterly figures show that people are phasing their withdrawals to minimise the amount of tax they have to pay. Withdrawals peak after the start of the new tax year as individuals ‘smooth’ their withdrawals to avoid paying unnecessary tax by taking their money out in a larger lump in a single tax year.
Commenting on the figures, Steve Webb, Director of Policy at Royal London said:
“Pension freedoms have been hugely popular and allow hundreds of thousands of people every quarter to draw on their pension savings in a flexible way. There is also evidence that people are being savvy about the timing of their withdrawals, spreading them over more than one tax year to reduce their overall tax bill. But it remains the case that we need to increase the proportion of people who take financial advice or guidance before making decisions about how much of their pension to withdraw”.
Notes to Editors
Full figures can be found at https://www.gov.uk/government/statistics/flexible-payments-from-pensions
About Royal London:
Royal London is the largest mutual life insurance, pensions and investment company in the UK, with assets under management of £139 billion, 8.6 million policies in force and 4,348 employees. Figures quoted are as at 30 June 2020.