Pension savers take £2.7bn cash from savings

The dash for pension cash shows no sign of relenting since the government introduced new flexible access to allow over 55s to spend their retirement savings as they wish.

The latest official figures published by HM Revenue & Customs (HMRC) show almost 170,000 over 55s have taken £2.7 billion from their pension funds since April 6.

Although HMRC has given the overall figures, the tax authority has declined to publish a breakdown showing whether the money has flowed out in lump sums or flexible access withdrawals.

HMRC also explained no comparative figures with the previous tax year can show how much income tax retirement savers paid on the money they have taken.

Doubts about pension data accuracy

Figures published by pension providers and regulators show a discrepancy with the HMRC figures.

Pension firm trade body the Association of British Insurers says £2.5 billion was paid out between April 6 and October 6.

Their figures show 80% of cash lump sum withdrawals went to pension savers aged between 55 and 65, while in 95% of cases, retirement savers took their entire pension funds as cash.

Regulator the Financial Conduct Authority (FCA) reported last month that more than 57,550 pension savers aged over 55 had withdrawn all their pension cash since April and that 137 had taken £250,000 or more as a lump sum.

Financial experts argue the data released about pension freedoms is interesting but lacked detail.

Waiting for meaningful flexible access figures

The industry believes not all pension providers have reported flexible access figures for the first six months of the scheme and HMRC’s statistical base is incomplete and may contain inaccurate information.

“The FCA is in the middle of an exercise to collate flexible access pension data from across the industry, and it’s likely these will be the most meaningful figures when the project is completed,” said Tom McPhail, pension expert at financial platform Hargreaves Lansdown.

“HMRC admits the data is not as good as it could be, so we will have to wait and see the reality of how people are treating flexible access to their pension savings.”

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