£30bn withdrawn ‘flexibly’ from pensions since April 2015

A total of £30bn has been withdrawn ‘flexibly’ from pensions since April 2015, taking advantage of the new ‘pension freedoms’ introduced in 2015, new figures published by HMRC have shown.

The average amount taken out each quarter per person has fallen again and now stands at £7,250.

The quarterly figures show that people are phasing their withdrawals to minimise the mount of tax they have to pay. Withdrawals peak after the start of the new tax year as individuals ‘smooth’ their withdrawals to avoid paying unnecessary tax by taking their money out in a larger lump in a single tax year.

Royal London director of policy Steve Webb said: “Pension freedoms have been hugely popular and allow hundreds of thousands of people every quarter to draw on their pension savings in a flexible way. There is also evidence that people are being savvy about the timing of their withdrawals, spreading them over more than one tax year to reduce their overall tax bill.

“But it remains the case that we need to increase the proportion of people who take financial advice or guidance before making decisions about how much of their pension to withdraw.”

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