£9.2bn cashed in since pension freedoms launch

Pension savers have cashed in more than £9.2 billion from their pots collectively since the pension freedoms were launched, figures show.

More than 1.5 million payments have been made since the freedoms were introduced in April 2015 for people aged 55 and over, HM Revenue and Customs (HMRC) figures show.

Some 162,000 people have accessed £1.56 billion in total flexibly from their pension pots over the past three months.

This is a slightly higher number than the previous quarter, when 158,000 people withdrew £1.54 billion collectively.

The freedoms mean that people are no longer required to use their pension pot to buy an annuity as a retirement income.

Instead, they have more choice over how they use their pot. Generally, the first 25% of the pot is tax-free and the remainder is subject to tax.

Annuities have been controversial in recent years due to falling rates, but they do act as a guarantee that someone will not out-live their savings.

Plans to allow existing annuity holders to cash them in were ditched in October, as the Government said consumers could not be guaranteed that they would get good value for money.

Pension Wise - the free, guidance service set up alongside the pension freedoms - has had more than 3.7 million visits to the website and more than 100,000 appointments have been made, the Government said.

Economic Secretary to the Treasury, Simon Kirby, said: "We are working with our partners, including Pension Wise, the regulators and pension firms, so that savers have the support they need to understand the options available to them."

There have been concerns that the pension freedoms could make the over-55s a particular target for fraudsters.

Proposed action to clamp down further on pension scams was announced in the Autumn Statement, including banning pensions cold-calling and giving firms more power to block transfers that raise suspicions. A consultation around the issue closes on February 13.