A total of £2.3bn was withdrawn flexibly from pensions by 347,000 people during the third quarter of the year, new HMRC statistics have revealed.

This figure was a 6% increase in the number of individuals withdrawing year-on-year from Q3 2019, but reflected a fall of 2% in the value of withdrawals.

HMRC stated that the number of withdrawals was also 2% higher than in the previous quarter. The average amount withdrawn per individual throughout July, August and September 2020 was £6,700, falling by 7% from £7,200 during the same months in 2019.

Canada Life technical director, Andrew Tully, suggested the figures were “encouraging” and reflected that people hadn’t necessarily rushed to their pension pots during the COVID-19 pandemic.

“However it will be worth keeping an eye on this figure to see if withdrawals rise as economic pressure intensifies,” Tully said. “It’s worth noting as well that for many, the ability to spend has been limited due to lockdown so the idea of using your pension as a cash machine for larger withdrawals for holidays or home improvements is less likely to appeal.

“We have now seen more than £37bn withdrawn from pension savings since the inception of pension freedoms in 2015. That is a staggering amount of money in what a relatively short space of time. Anyone accessing their pension for the first time should be aware of a potential sting in the tail – the money purchase annual allowance. This is especially important for those who plan to continue paying into their plan.”

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