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Warning over cashing out through new pension freedoms

By Vicky Shaw

Published 08/01/2016

Concerns were raised for people taking up new retirement freedoms as figures showed that more than two-thirds of pots accessed by savers between July and September were fully cashed out.

A total of 178,990 pensions were accessed during the three-month period, and 68% of these, amounting to 120,969 pensions, were fully cleared, according to figures from the Financial Conduct Authority (FCA).

The remaining 32% of pensions that were accessed were dipped into to take an income.

Most (88%) of the pensions where the money was fully taken out had less than £30,000 in them, the FCA said.

The data was collected by the FCA from retirement income providers covering an estimated 95% of assets in contract-based pensions to enable it to track changes in the market.

Freedoms introduced in April 2015 have made it easier for people aged 55 and over to take their pension money how they wish, rather than having to use their savings pot to buy a regular income called an annuity.

Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: "No one wants to see retirees run out of income and face debt in later life.

"But these figures show that many people could face this worrying prospect.

"While general guidance is available from Pension Wise, many people with unpaid debts and smaller pension pots will struggle to afford professional product-related advice."

Belfast Telegraph

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