Pensions - Articles - Comments on flexible payments from pensions figures

Today’s HMRC figures show that £2 billion was withdrawn from pension schemes under flexible pension rules in Q3 2018. With £5.9 billion withdrawn from 1.66 million payments through the year to date, 2018 is on track to exceed 2017 on both counts when 1.67 million payments were made totalling £6.54 billion in cash withdrawn

 Stephen Lowe, group communications director at Just Group, says that the figures are growing evidence that drawdown, particularly non-advised drawdown, is becoming increasingly common for those entering retirement especially in the context of FCA research published in the past few weeks:

 “Looking at these figures alongside the recent FCA’s Data Bulletin (no.14)2 and last week’s FCA Product sales figures3, it is evident that trends are emerging in a post-freedoms landscape.

 “While the ‘dash for cash’ has not yet materialised as many feared, the data provides clear evidence that people are changing their behaviour. HMRC’s report show that in 2018 a record number of payments were made to a record number of individuals and resulted in a record value in the amount of cash withdrawn; at the same time the FCA just reported record sales of income drawdown products for Q2 2018.

 “Investing in a pension drawdown product is not for the faint hearted – it’s complex and can be risky. So we should be concerned that the FCA announced people did not get financial advice on nearly a third (31%) of pots that entered drawdown, and sales without advice reached a post-freedoms high in Q2 2018. Many people are sleepwalking in to drawdown without the benefit of regulated financial advice and often without the benefit of free and impartial help from the Government-backed PensionWise service.

 “Our message is simple: as a minimum people should make use of the Government’s independent and impartial free guidance service, PensionWise. It’s a good place to get help on the basics from a friendly bunch of people who won’t sell you anything – just help you find your way around what can be very complex decisions.”

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