Over 190,000 retirement plans entered drawdown and were not fully withdrawn in 2018/19, new FCA figures have shown.

By contrast, fewer than 74,000 annuities were bought during the period. Over 350,000 pots were fully withdrawn during the year but the vast majority of these (90%) were small pots worth £30,000 or less.

In addition, around half of savers are making retirement choices without receiving regulated advice or guidance.

“These figures demonstrate the enduring popularity of the pension freedoms, with almost three people taking a regular income through drawdown for every one person buying an annuity. This represents a monumental shift in retirement behaviour the impact of which will be felt across the UK economy,” AJ Bell senior analyst Tom Selby commented.

“While on the face of it the fact more than half of pots accessed are being fully withdrawn could be a cause for concern, the bulk of these are small pots and so there is less risk of people being hit with huge unnecessary tax bills. Equally, it is encouraging that as pension funds get larger and the tax impact of significant withdrawals becomes potentially greater, fewer people are taking 8% or more from their fund.

“It is impossible to make any reasoned judgments on the sustainability of these withdrawals without understanding the person’s overall financial position. Someone with a significant defined benefit pension pot, for example, might be able to draw from their SIPP at a faster rate without putting their retirement future at risk. There will also be others who have enjoyed strong investment performance and are reaping the rewards.However, far too few people are seeking advice or guidance about crucial retirement decisions across the board, and boosting these numbers needs to be a priority for the regulator.”

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