Investors Withdraw Too Much Too Soon from Pensions

While the majority of savers are sensibly accessing their pension pots with sustainable withdrawal rates, some are at risk of running out of retirement cash says the ABI

Emma Wall 15 August, 2016 | 12:42PM
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Savers withdrew £8 billion from their retirement pots in the first full year of pension freedoms, according to the Association of British Insurers. £4.3 billion has been taken in lump sums averaging £14,500 per payment, and a further £3.9 billion has been accessed using drawdown with an average withdrawal amount of £3,800.

Pension freedoms were introduced in April 2015, allowing every pension saver over the age of 55 access to their retirement savings. Before the freedoms were introduced it was compulsory to buy an annuity at retirement unless you could prove you could provide yourself with a considerable income through your retirement.

When the plans were announced by then Chancellor George Osborne in the March 2014 Budget there were concerns that a ‘Lamborghini culture’ would emerge, and pensioners would splurge their retirement savings on fast cars and holidays rather than sustainable investments to provide a multi-decade income.

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About Author

Emma Wall  is former Senior International Editor for Morningstar