New data on pensions shows that 4 out of 5 cash lump sums are paid out to under 65s, according to The Association of British Insurers (ABI).
This week marks 6 months since the pension reforms were introduced in April. New figures suggest that 80% of cash lump sum withdrawals were made by individuals under the age of 65.
The ABI data shows that:
- there was an 80% increase in calls to pension providers in the first month
- the first 3 months saw providers paid out £2.5bn in cash and income drawdown payments
- 60% of cash lump sums in the first 3 months went to individuals under 60, with 80% going to people under 65
- 42% of income drawdown payments went to under 65s
- 95% of savers who took out there pension as a lump sum withdrew their whole pot
- pension freedom withdrawals in the first 3 months represent less than 1% of all pension funds held by over 55s.
Yvonne Braun, director of long-term savings policy at the ABI, said:
“These figures show that tens of thousands of people have used the new pension freedoms so far to access money they have saved. There’s been a lot of activity involving the under 65s, who account for more than 4 in every 5 cash lump sum withdrawals, but the majority of people have only been cashing in relatively small pots which account for a tiny proportion of all the money which could have been released. This shows that on the whole the British public are taking a sensible approach.
“Giving individuals greater power over their pension pots should encourage more people to put money aside for their retirement.”