Pension savers withdraw £70bn in decade since ‘freedoms’



A decade on from George Osborne’s ‘pension freedoms’ Price range bombshell announcement in 2014, the most recent HMRC knowledge confirmed that £70bn of retirement money has since been accessed flexibly by British savers.

The reforms had been applied in April 2015 and ditched restrictions that beforehand utilized to ‘drawdown’ and ushered in a brand new period of freedom and selection for savers aged 55 and over.

Tom Selby, director of public coverage at AJ Bell, stated the change was arguably probably the most important pension tax reform in nearly 100 years and a reform which has revolutionised the retirement revenue market.

He stated: “Brits can now construct a retirement revenue plan to swimsuit their wants, doubtlessly combining the safety of an annuity with the flexibleness of retaining cash invested via drawdown.

“Reforms to pensions demise advantages have additionally been a recreation changer, permitting individuals to move on their pensions utterly tax-free to family members in the event that they die earlier than age 75.”

He stated that enhancing the assist out there to savers and retirees is crucial. “The joint overview being carried out by the Treasury and FCA on the recommendation steerage boundary is central to this, with the proposed ‘Focused Help’ regime doubtlessly enabling companies to supply extra helpful steerage to all.

“Selling the advantages of regulated recommendation, which stays the gold customary with regards to serving to individuals make good monetary choices, can also be essential.”

The corporate has give you ten key numbers that inform a narrative about retiring in Britain since 2015:

  1. £72.2bn – The overall worth of pensions accessed ‘flexibly’ for the reason that pension freedoms had been launched in April 2015. (Supply: newest out there HMRC knowledge)
  2. 705,666 – The variety of pension pots accessed for the primary time in 2021/22 (the latest yr official knowledge is accessible). (Supply: FCA knowledge)
  3. 205,641 – New drawdown insurance policies entered into however not totally withdrawn in 2021/22 (the latest yr official knowledge is accessible). (Supply: FCA knowledge)
  4. 68,514 – Variety of annuities bought in 2021/22 (the latest yr official knowledge is accessible). (Supply: FCA knowledge)
  5. 4% – Proportion of plans accessed for the primary time the place plan holders took regulated monetary recommendation in 2021/22 (the latest yr official knowledge is accessible). (Supply: FCA knowledge)
  6. 40% – Proportion of standard drawdown revenue funds withdrawn at a fee of over 8% of the pot worth in 2021/22 (the latest yr official knowledge is accessible). (Supply: FCA knowledge)
  7. 6% – Proportion of individuals aged 55+ who had been saving in an outlined contribution (DC) pension in Could 2022 who stated they’d totally encashed the pension, or taken out a lump sum, to cowl day-to-day bills. (Supply: FCA Monetary Lives Survey)
  8. 26,619 – Complete variety of outlined profit (DB) to outlined contribution (DC) transfers carried out in 2021/22 (the latest yr official knowledge is accessible). (Supply: FCA knowledge)
  9. £1.17bn – Amount of cash reclaimed by savers overtaxed on their pension withdrawals since April 2015. (Supply: AJ Bell evaluation of HMRC knowledge)
  10. £3,216 – Common reclaim worth within the newest quarter (This fall 2023). (Supply: AJ Bell evaluation of HMRC knowledge)

 



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