Two hundred thousand over-55s free up their pension pots following reforms

More than 200,000 people have taken advantage of new pension freedoms since they were introduced last year, new figures show.

The Treasury said a total of 232,000 people have benefited from flexible access to their pension pots following the Government's reforms.

In the second quarter of 2016 the number peaked at 159,000; however, this was partly down to the introduction of compulsory reporting in the industry in April.

Economic Secretary to the Treasury Simon Kirby said: "It's only right that people should have a choice over what they do with their money and today's figures show that pension freedoms continue to be a popular choice.

"Our pension reforms have already given hundreds of thousands of people access and responsibility over their hard-earned savings and we will continue to make sure that the pension freedoms work well for everyone."

The new freedoms give people aged 55 and over a wider range of choices over how they use their pension pot, rather than being required to buy a retirement income called an annuity.

The Government is planning to extend the freedoms further from April 2017, giving millions more people the ability to sell income from their annuities, subject to agreement from their provider.

It has also announced plans to protect consumers by capping early exit fees and allowing earlier access to the Government's advice service Pension Wise.

It comes after the Pensions Regulator this week said pension saving is becoming "the norm", with two-thirds (66%) of employees now active members of a pension scheme, compared with just 47% in 2012.

But a former pensions minister warned that many of the six million people who have automatically enrolled in a workplace pension are saving far short of what they will need when they retire.

Steve Webb, now director of policy at Royal London, said the contributions must be increased to a "realistic level" urgently.

Under the automatic enrolment scheme, employees contribute a portion of their wages into their pension, with contributions also coming from employers as well as tax relief.

The minimum contributions are due to be gradually phased upwards.