More than 200,000 people have withdrawn part or all of their pension pot in the 3 months since the introduction of the new pension freedoms, according to figures released by the Financial Conduct Authority (FCA).
The number of pension polices that have been accessed since the reforms is 204,581, compared to 95,372 in the same period in 2013.
While the majority of consumers could access their pot through a drawdown or lump sum option without needing to transfer providers, the report shows that in practice, most people need to transfer to a new contract in order to access their money.
The FCA’s other key findings are:
- 120,688 consumers have made use of some form of cash withdrawal
- 71,455 have used a form of income drawdown
- annuity sales were at 12,418, as compared to 89,896 in the same period in 2013
- 84% of consumers, or 3,416,000 people, did not experience an exit charge.
The average time it takes to transfer a pension fund is 16 days. Of those consumers who have faced an exit charge, 358,000 were charged between 0% – 2% and 147,000 were charged 5% and over.
Figures from the Association of British Insurers (ABI) show that the value of payments made to customers since the introduction of the reforms has almost reached £2.5 billion. £1.3 billion on this total has been paid out in lump sums, with the average payment being £15,000.
Yvonne Braun, director for long term savings policy at the ABI, said:
“These figures are a testament to how well pension providers have adapted to the radical new approach to pensions which came into force on April 6th. They also show the popularity of the reforms.
“However, people will only be able to benefit fully if they have been able to build up enough in savings during their working lives. Creating a stronger savings culture is therefore crucial.”