Pension freedom withdrawals hit a record low, as volatile stockmarkets prompt caution

The decline in average pension cash withdrawals could be a “a sign of restraint”, given the increased volatility in global stockmarkets in the final quarter of 2018. 

The average pension cash withdrawal was £7,197 in the final three months of 2018, which represents the lowest figure on record since the introduction of pension freedoms in 2015. In the previous quarter withdrawals per person stood at £7,597.

In total during the final quarter of 2018, 264,000 over-55s withdrew cash from their pension pots, for a total sum of £1.9 billion. This was a slight decline on the previous quarter, where withdrawals stood at £1.96 billion from 258,000 individuals.

According to Tom Selby, senior analyst at AJ Bell, the decline in average pension cash withdrawals could be a “a sign of restraint”, given the increased volatility in global stockmarkets over the three-month period.

He adds: “In these circumstances it can be sensible to cut back withdrawals in order to ensure you don’t run out of money during retirement.

“The past 12 months will have been particularly difficult for anyone who entered drawdown for the first time – especially if they took large income withdrawals just as markets hit the skids.

“Anyone in this situation has an uphill task to recover the losses they have made, and will be praying for a better year for their investments in 2019.”

Overall, though, as the fourth anniversary of the pension freedoms nears the latest figures show the total amount taken has reached £23.6 billion. Moreover, the freedoms have been accessed by over one million individuals.

- This article was originally written by our sister publication Moneywise.

 

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