Around 60,000 people have taken part of their pension as cash in the 10 weeks since the government’s pension freedoms were introduced, the Chancellor George Osborne has announced.
The Chancellor told the House of Commons during treasury questions that more than £1 billion has been withdrawn from pension funds since 6 April.
Osborne told MPs:
“It is a sign that this is a real success, but we have to make sure that people get the best advice, that the market responds and that companies up their game in helping customers to make use of these freedoms.”
The reforms allow savers to withdraw multiple cash lump sums from defined contribution pension schemes. The first 25% is tax-free and the remainder is taxed at the individual’s marginal rate.
Osborne’s announcement is echoed by recent data from The Association of British Insurers (ABI) that showed insurers have experienced an 80% increase in phone enquiries since the reforms were introduced. ABI members have dealt with more than 1 million pension-related enquiries since the 6 April.
Dr Yvonne Braun, director of long term savings policy at the ABI, said:
“Insurers are committed to making the pension reforms a success and are rising to the challenge, working around the clock to deal with the huge demand from customers.
“The biggest overhaul of pensions in a generation introduced in just a year was always going to be a challenge, and where issues occur the industry is committed to working closely with the government and the [Financial Conduct Authority] to resolve them.”