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London,
25
January
2018
|
11:17
Europe/London

HMRC data on flexible payments shows £6.54bn withdrawn from pensions in 2017

HMRC has just published its latest update on flexible payments from pensions > https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/675350/Pensions_Flexibility_Jan_2018.pdf .

This shows the number and value of payments taken from pensions as cash using the pension freedom rules.

The official numbers show £6.54bn was withdrawn in cash from pensions last year. That is substantially up from the £5.69bn withdrawn in 2016.

Andrew Tully, pensions technical director, Retirement Advantage commented: ‘The dash for cash shows no signs of slowing as significant sums continue to be withdrawn from pensions. A trend is emerging of pension pots being withdrawn fully, but there is insufficient information to tell us why. It could be that people are reacting to uncertainties in the economic environment, or are simply worried about the legislative goalposts changing again, or they might just want their money.

‘The freedoms have certainly generated a welcome windfall for the Treasury but it’s clear tax has not been the natural brake to prevent people withdrawing large sums before retirement.

‘We know people are accessing their pensions for the first time at younger ages, certainly before they are due to retire. And from our research we know they are spending the cash on making home improvements, going on holidays, paying off debts and also saving the money outside of the pension.’

Free tools are available to help people calculate the potential tax charge for pension withdrawals including here http://www.retirementadvantage.com/pension-tax-calculator