Today’s figures show an unusual reversal in seasonal trends with a 2% increase in the number of individuals taking a withdrawal from their pension, rising from 327,000 in Q2 2020 to 347,000 in Q3. In previous years, there has been a peak in April to June, but lockdown, as in all walks of life, has led to different behaviours.
“However, in terms of the average amount withdrawn, usual downward trends have continued. Average amount withdrawn has fallen by 7% from £7,200 in the same period last year to £6,700 this quarter. This is even more welcome than usual when stock markets have been particularly volatile. There have been concerns that over 55s facing financial difficulties during Covid-19 would look to their pensions to provide a short-term boost and deplete their pension pot when fund values remain depressed. This will remain concerning as we move through a second wave with employment prospects particularly concerning.
“Alongside Covid-19 there are other headwinds in the path of a stock market recovery, with ongoing uncertainty over Brexit negotiations. Those concerned over withdrawing from their pension in a volatile market should seek professional financial advice. Pensions are designed to provide an income throughout retirement and reducing the amount of income withdrawn during a period of downturn could be important for the longevity of the pension pot.”
* https://www.gov.uk/government/publications/flexible-payments-from-pensions/flexible-payments-from-pensions
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