Savers take ‘sensible approach’ to pensions access

Savers are taking a ‘sensible approach’ when accessing their pension, accroding to data released by the Association of British Insurers (ABI).

The data shows that 57% of pots have had 1% or less withdrawn from them in the last quarter. A further 4% of pots had 10% or more withdrawn in 1 go.

55% of cash withdrawals were for less than £10,000. For savers who cashed in their entire pot, 96% were worth less than £10,000.

Important findings:

  • There were 300,000 lump sum payments totalling £4.3 billion (an average withdrawal of £14,500)
  • £3.9 billion has been paid out in 1.03 million drawdown payments (with an average payment of £3,800)
  • £4.2 billion has been invested in annuities (with an average fund of £52,500)
  • £6.1 billion has been invested in 90,700 drawdown products (with an average of £67,500).

A large proportion of savers are looking at different providers. 41.5% of savers switched when buying an annuity and 53% chose a different provider when they accessed their money through drawdown.

Yvonne Braun, director of policy, long term savings and protection at the ABI, said:

“A minority are withdrawing too much soon from their pension pot […] and many other customers are taking their entire pot in 1 go.

“There may well be other factors at play here, such as people having other retirement income, for instance, final salary pensions or multiple pots. But this is a warning that needs further investigation.

“The fall in annuity sales in the most recent quarter reflects ongoing pressure on rates, which will not have been helped by the recent decision to lower interest rates to a 300 year low, and further quantitative easing measures.”

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