Don’t Tweak Pension Freedoms, Savers Warn Ministers

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Retirement savers do not want the government to tweak their pension freedoms as MPs mull over if more curbs are needed.

Parliament’s influential Work and Pensions Committee has recently ended an inquiry scrutinising the financial risks of pension freedoms, with some MPs hinting they might ask the government to restrict how retirement savers draw and spend their money.

But almost three out of four people asked said they did not want to the system to change and pension freedoms help savers phase out working and smooth their way into retirement.

A quarter of people added that they would accept the minimum age for withdrawing pension cash to rise to 60 years old.

Pension freedoms were introduced in April 2015 to allow any retirement saver with a direct contribution scheme to access their cash from the age of 55 to spend how they wish.

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At the time, ministers feared people would take all their money in one go and spend the cash on holidays, luxury cars – including that famed yellow Lamborghini.

These concerns have subsided after the latest figures show a consistent trend in the value of withdrawals.

Steven Cameron, pensions director at Aegon said: “As the third anniversary of the pension freedom approaches there has been talk in some circles of restricting access. This has largely been prompted by concerns that people may run out of money in retirement by overspending or invest unwisely and lose their savings.

“However, the consensus amongst those we spoke to is that the freedoms should remain broadly unchanged. They’re seen as hugely helpful as a means of gradually moving out of the workforce by enabling people to start drawing an income that they can supplement with part time work.”

Pension freedoms in numbers

 

Year Quarter Withdrawals No of savers Value (millions)
2015 Q2              121,000                84,000 £1,560
Q3              130,000                81,000 £1,170
Q4              123,000                67,000 £800
2016 Q1              142,000                74,000 £820
Q2              296,000              159,000 £1,770
Q3              324,000              158,000 £1,540
Q4              393,000              162,000 £1,560
2017 Q1              381,000              176,000 £1,590
Q2              403,000              200,000 £1,860
Q3              435,000              198,000 £1,590
Q4              454,000              198,000 £1,504
     
Totals:          3,202,000          1,557,000 £15,764
Yearly Totals      
2015              374,000              232,000 3530
2016          1,155,000              553,000 5690
2017          1,673,000              772,000 6544

 

Source: HMRC

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