Since April 2015 individuals aged 55 and over have been able to access their defined contribution pension savings as they wish, subject to their marginal rate of income tax.
The total value of pensions withdrawn under the new freedom reached £3.53bn ($5bn, €4.6bn) by the end of the fourth quarter.
HM Revenue & Customs has monitored the uptake of the new freedoms but concede that the figures for 2015-16 are not comprehensive as industry reporting will not become mandatory until April 2016.
The number of people making withdrawals does not equal the total number of individuals for all three quarters as some have taken payments in multiple quarters.
Settling down
Fiona Tait, pensions specialist at Royal London, said: “The figures, while not complete, suggest the initial rush to access pensions money may be settling down. As well as a decrease in the number of people making withdrawals, the average payment per individual is significantly lower now at less than £12,000 based on today’s figures, in comparison to the first three months of the pension freedoms being available, when the average was over £18,500 per person.
“It’s too early to suggest we might be reaching the point where demand has finally stabilised but it’s an encouraging trend that suggests people are not rushing to encash their funds, just because they can.
“Of more interest would be the number of people who are paying the upfront tax for lump sum withdrawals and whether the guidance service that the government put in place is adequate in informing people of the penalties that apply.
“Royal London raised the potential lack of awareness of the tax implications as initial research of our customers showed that many had already made up their minds and do not necessarily ask for advice or guidance,” Tait said.
