Pension withdrawals up £1.3bn in 2018: HMRC

With £7.8 billion withdrawn from 2.3 million payments through the year to date, 2018 has exceeded 2017 by £1.3 billion in withdrawals and 614,000 payments.

Stephen Lowe, group communications director at Just Group, commented: "These are record numbers but that's only to be expected as more people reach the age they can take a flexible payment and awareness of flexible options increases. Our big problem is that we don't have any 'what does good look like' benchmarks to compare these figures to, plus they are only a partial snapshot.

“Billions of kinds of tax free cash payments are not included in these figures nor are many other pension withdrawals, such as small pot withdrawals or purchases of guaranteed income for life solutions. Nor do the figures tell us how many individuals have withdrawn money, how much they have withdrawn or how often.

“There is nothing in these figures that ought to make us believe everyone making pension withdrawals properly understands the tax implications of their actions, the restrictions they are now subject to, or the longer term consequences of withdrawing money. Nearly four years into the era of pension "freedom", we perhaps ought to be questioning the usefulness of the information we do have if we are going to start dealing with some of fundamental questions about how these pension reforms are working in practice."

Samantha Seaton, CEO of Moneyhub, added: “Pension freedoms have allowed people to engage more actively with their pensions and many are already aggregating their pots. But taking advantage of the freedoms is not the right choice for everyone and there are rightly concerns around how to ensure that people have access to the right knowledge to help them make the right choice for them. With little sign of the pension landscape becoming less complicated, product and service providers need to take substantial steps to improve education and awareness.

“It’s here that Open Banking can play a significant role, as both consumers and advisers are able to make informed short and long-term savings decisions for their current and predicted lifestyle. Coupling a much clearer picture of their financial position with receiving smart nudges will help people identify where they can increase contributions and save more. Additionally, advisers are also able to access the most up to date financial information. This helps to ensure the correct decision is made for each individuals’ particular needs and circumstances.”