British pension withdrawals could add up to £4.7bn
The changes to pension regulations, which allow savers more flexibility in accessing their funds, could have led to £4.7bn being taken out of pension pots.
Differing reports from HM Revenue & Customs (HMRC) and the Association of British Insurers (ABI) means the picture is still unclear, but there is no doubt that many have taken advantage of the new regime.
The HMRC data suggests that 146,000 individuals received £2.72bn in payments this year in Q2 and Q3, while the ABI data reveals £4.7bn has been withdrawn since April.
Some of the confusion arises from the fact that smaller pots are generally taken as cash, while bigger ones are still being used to access retirement income.
The new freedoms have caused a wide ranging debate in the industry and amongst savers themselves.
Marketing director at Intelligent Pensions, Andrew Pennie, commented: “There is a lot of misunderstanding and poor decisions,” and added that the biggest factor is the misconception on the cost of taking professional advice. However, Pennie remains positive, so long as the industry works to increase awareness among the public.
The ABI data shows that the annuity market is benefitting from an increase in sales, with 22,380 products worth £1.17bn in Q3 this year, as opposed to 18,200 worth £990m in Q2. This is also the first quarter-on-quarter increase for the past three years.
In 2017, the secondary annuity market will come into action and a further jump is expected then.