According to the latest data from Taxman, around £25bn has been withdrawn from various schemes related to pension. HM Revenue& Customs revealed that they saw a huge record in the payments made and a number of people who use the freedoms in the first quarter of this year. The payments of about £2.06bn were made to 284,000 individuals across 648,000 withdrawals. These figures are higher than the margin compared to the fourth quarter of the year 2018 when an average of £7200 was accessed by 264,000 savers. The company also revealed that the occupational pension scheme members claimed the pension tax relief of £4.3bn in the year 2017-18.
Freedom withdrawal crosses £25bn
The tax relief rose to a new level of £23.3bn in the year 2017-18 from 22.5bn the previous year. The tax relief granted to the employers and employees hit £600m in a year during which the employee relief surged to £200m. The group communications director at a top company said that we all must remember that the numbers only represent a fraction of money from the total cash. It is not a complete picture as it does not include access to pensions under small pot rule or accessing to the tax-free cash.
Around £7254 was the average pension freedom withdrawals per person in the first quarter of this year. It is a fall from the previous year which was around £7644. A senior analyst from AJ Bell said that the savers continue to make use of their pension freedoms more sensibly and are effectively managing the sustainability which is understood from all this evidence. He also added that the people using pension freedom are continued as expected. But the average amount per withdrawal is constantly seeing the downfall for many years.
The pension director of Aegon’s mentioned that the savers were seemed to withdraw less cash on average showing the long-term trends. The average withdrawal was £8430 in this year which is higher compared to the £3358 last tax year. He added that the numbers are encouraging that the flexibility, in turn, leads to the responsibility and the freedoms have an increased risk. The retirees were able to get a fixed income that would help them for the rest of their lives. He also said that the present conditions are positive that many are trying to invest their money on appropriate funds and ensuring not to overspend.
The people who take advantage of pension freedoms are the people who are in immediate access to the professional financial advice, he added. This concludes that though the people are withdrawing from freedom pensions are actively involved in investing at the right funds. They take the steps little by little thus making them ensure that they are n the safer side. The people have more control over their pension savings that makes them move across the traditional retirement age with the possibility of working again.