Following pension reforms in 2015 British savers have withdrawn significant sums from retirement funds, though not as high as some analysts predicted, according to figures released by the Association of British Insurers (ABI) as reported by the Guardian newspaper.
According to the report UK savers have taken out nearly £6bn from retirement funds since the introduction of pension reforms introduced by George Osborne last year. Osborne’s changes took away the requirement to convert pension pots into annuities – which in theory provide an income for life – and gave people the choice of what they wished to do with their retirement funds.
The new figures show that more than 213,000 lump sums totalling £3bn have been made to over-55s following the implementation of the changes last April. Retirees also have the added expense of rising funeral costs. In addition pension firms have paid out £2.9bn in regular sums to provide income.
Speaking on behalf of the Association of British Insurers their director of policy for long-term savings Yvonne Braun stated, “Following some initial pent-up demand, the number of people accessing their pension pot as cash in one go has settled down. People are taking a sensible approach and considering how they will pay for their whole retirement.”
The total number of over-55s taking out lump sums from their pensions since the regulation changes is below the figure predicted by many analysts who initially believed more than £6bn would be taken out in the first four months alone.
The Guardian reported, ‘The figures show that around £660m was paid out in cash lump sums during the final three months of 2015. This is well down on the £1.3bn withdrawn during the three months to 30 June, and the £1.2bn taken out in the period 1 July to 30 September.’