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Flexible pension withdrawals have reached almost £33bn since 2015

In the fourth quarter of 2019, there were a total of 828,000 pension withdrawals made by 327,000 individuals, totalling a bill of £2.2bn.

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The average amount of pension withdrawals has fallen by five percent
The average amount of pension withdrawals has fallen by five percent

HMRC said that the £2.2bn was withdrawn from pensions flexibly and this was an 18 percent increase from the same period in 2018 - £1.9bn.

 

It also said that the total value of flexible withdrawals from pensions, since flexibility changes in 2015, has reached almost £33bn.

 

The flexibility changes - the pension freedom tax rules - allow individuals who have reached the required minimum pension age, currently set at 55, to access their pension savings early when they are members of defined contribution pension schemes.

 

There are several options for members who wish to take their pension benefits – they could be taken as one or more payments a year for a number of years, several payments a year over a shorter timeframe or the full value can be withdrawn in one payment.

 

Similarly to the third quarter of 2019, HMRC said the fourth quarter saw 327,000 individuals withdraw from pensions, a 24 percent increase from 264,000 in the same quarter last year.

 

HMRC said this continued lower number of individuals, compared to quarter two of 2019, reflects the normal seasonal pattern. Withdrawal numbers typically peak in quarter two of a given year, as this coincides with the beginning of a new tax year. HMRC added that this seasonality comes as some individuals access their pension over a number of years and often use the flexibility to withdraw funds at the beginning of the tax year.

 

The average amount withdrawn per individual in quarter four of 2019 was £6,800, falling by five percent from £7,200 in the final quarter of 2018. Since reporting became mandatory in the second quarter of 2016, HMRC said the average withdrawals have been falling steadily and consistently, with peaks in the second quarter of each year becoming a noticeable trend.

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