Belfast Telegraph

Reform of pensions sees £1.8bn of savings withdrawn

By Vicky Shaw

Pension savers withdrew more than £1.8bn in the first two months of the new retirement freedoms, according to figures from the Association of British Insurers (ABI).

The data, released to mark 100 days since the reforms came into force, shows that during April and May, savers took out more than £1bn in 65,000 cash withdrawals from pension pots. The average amount taken was £15,500.

Some £800m of payments were also taken out by savers from income drawdown policies, in 170,000 withdrawals. Income drawdown is where someone leaves their pension pot invested but takes an income directly from it.

Meanwhile, pension savers put in £630m to buy 11,300 retirement annuities and a further £720m to buy 10,300 income drawdown policies.

The ABI said the average annuity was purchased with £55,750 and the typical fund put into drawdown was £69,900.

When someone buys an annuity, they use money in their pension pot to buy a regular income. But annuities have been controversial in recent years due to disappointing rates and people not shopping around to get the best deal.

Belfast Telegraph