Millions of people are relying on just £7k in retirement

New pensioners aren’t splashing the cash

When the new pension rules of Pension Freedoms came into force in April 2015, fears were expressed that pensioners might raid their pension pots to go on a spending spree through pension drawdown.

The former Pensions Minister Steve Webb famously remarked at the time that pensioners could choose to spend their personal pension savings on buying a Lamborghini or holiday home if they wished.

However, the evidence suggests that this mass withdrawal of money hasn’t happened.

While the total value of pension withdrawals through income drawdown made since April 2015 is over £25bn, the average withdrawal made between July and September 2018 was £7,597, the lowest level recorded by HMRC since their records began in Q2 2015. This suggests that people coming to their retirement age aren’t using the cash as a big windfall and spend on those luxuries that couldn’t enjoy when in employment. Whether through purchasing annuities or withdrawing their income in drawdown, people are being responsible with their retirement funds.

Volatility playing a part.

The lower level of pension withdrawals could be a sign that people were reacting to market volatility and concerned to preserve their wealth. Managing withdrawals from pension funds or buying an annuity can be a challenge for those unfamiliar with the stock market or pensions; that’s why taking financial advice from a regulated by the Financial Conduct Authority adviser is so worthwhile. Ensuring their pension pots last as long as they do themselves is a concern often expressed by those approaching retirement; we can help ensure retirees make the right choices at the right time and also advise on the most tax-efficient way to withdraw money.

If you’re looking for Pension Drawdown Advice or looking to purchase a Pension Annuity, speak with our advisers today on 0800 164 2664. Pension Works is authorised and regulated by the Financial Conduct Authority.