HMRC says £3.5bn taken since freedoms but Q4 shows signs of slowing

The figures from real time information reports submitted to HMRC for the period between 6 April and 31 December 2015 suggest the rush to access pots may be settling down.

In the fourth quarter the amount withdrawn from pots fell to £800m from the £1.2bn recorded in Q3, and far below the £1.6bn withdrawn in Q2.

Although the figures are not comprehensive, it gives a good picture of how people are reacting to the April freedoms.

The number of flexible payments in the final quarter of 2015 reached 123,000, which were made to 67,000 individuals. Around 374,000 flexible payments in total have been made since last April.

Payments in the second quarter of 2015 totalled 121,000 made to 84,000 individuals, reaching £1.6bn in value.

In the third quarter, results were similar with the value of payments reaching £1.2bn with 130,000 payments made to 81,000 individuals.

Flexible payments came into effect in April 2015 with individuals aged 55 and over able to access their defined contribution (DC) pension savings as they wished subject to a marginal rate of income tax.

Royal London pensions specialist Fiona Tait said although the figures are incomplete, they suggest the initial rush to access pensions money may be settling down.

"As well as a decrease in the number of people making withdrawals, the average payment per individual is significantly lower now at less than £12,000 in comparison to the first three months of the pension freedoms being available, when the average was over £18,500 per person.

"It's too early to suggest we might be reaching the point where demand has finally stabilised but it's an encouraging trend that suggests people are not rushing to encash their funds, just because they can," she added.

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• Topics
• Defined Contribution
• freedom and choice
• HMRC
• Budget 2015
• defined contribution
• DC
• Royal London
• Income tax
• Flexible Retirement Plan