Retirees withdrew £1.8 billion from their pension pots in April and May, the Association of British Insurers (ABI) has revealed.
The figures, published on 15 July, came on the 100th day since new freedoms in the way people are able to access pension savings were introduced in April. A breakdown of the figures showed that:
- savers made 65,000 cash withdrawals from pension pots, totalling more than £1 billion
- the average pot taken was £15,500
- savers took out £800 million in payments from income drawdown policies in 170,000 withdrawals
- savers used £630 million to buy 11,300 annuities and £720 million to buy 10,300 income drawdown policies
- the average annuity was purchased with £55,750 and the average fund put into drawdown was £69,900.
Dr Yvonne Braun, the ABI’s director for long term savings policy, said: “This is an important reminder that tens of thousands of people are successfully accessing the pension freedoms as intended and on the whole the industry has risen to the challenge of giving customers what they want.”
Meanwhile, people with existing annuities will have to wait longer before they can sell the income in exchange for a lump sum, following a summer Budget announcement.
In the March Budget, the government said it would legislate from April 2016 to introduce a secondary annuities market, allowing people already receiving income from an annuity to agree with their provider to sell the income to a third party for a one-off cash payment or an alternative retirement product.
But the 8 July Budget document said: “Following consultation, the government has decided to delay implementation of this measure until 2017, in order to ensure there is a robust package to support consumers in making their decision. It will set out further plans for introducing this measure in the autumn.”