Savers withdraw £1.8bn from their pension pots
According to data compiled by the Association of British Insurers (ABI), nearly a quarter of a million payments worth £1.8 billion were made to customers from pension pots in April and May of this year, under the new pension freedom rules. With the average pension pot withdrawn of £15,500.
Over the same period, £1.3 billion was put in to buying nearly 22,000 regular income products, with over 50% of this money going into income drawdown products rather than annuities.
The average annuity was purchased with £55,750 and the average fund put into drawdown was £69,000.
Annuities appear to remain in decline, with the ABI recording that savers put in £630 million to buy 11,300 annuities over the two months since the pension freedoms kicked in; this compares to nearly £1.2 billion per month in sales of annuities in 2012.
In June chancellor George Osborne announced in parliament in that around 60,000 savers had taken advantage of the pension flexibilities he originally announced in his March 2014 Budget speech.
The ABI’s data is collected from major insurers and pension providers, but its data will not reflect the experience of some drawdown providers, such as Hargreaves Lansdown, which is not a member.
The director for long-term savings policy at the ABI, Yvonne Braun, said that the new figures were an important reminder that the pensions industry had risen to the challenge of pension freedom.