The retirement landscape has changed dramatically since the pension freedoms were introduced four years ago (April 2015), handing retirees the ability to take control of their retirement savings.
It’s four years since the introduction of pension freedoms giving retirees greater flexibility around when and how they access their retirement savings. While there is little evidence that people have blown the lot on Lamborghinis, there are some lessons to be learnt from our pension spending habits.
With freedom comes responsibility, and the indications are that those taking control of their own savings during retirement are acting prudently rather than recklessly.
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.
The pension freedoms introduced in April 2015 saw a dramatic change in how we save for and fund our retirement. The key change was around unrestricted access to pension funds, handing individuals the opportunity to put themselves in the pensions driving seat. But navigating these new opportunities is easier said than done: below are two examples that spring to mind.
Three years since the introduction of pension freedoms, pension withdrawals are at an all-time high. In the first three months of the 2018/19 tax year, savers withdrew a collective £2.3 billion from their pensions, an uptick of 50 per cent compared to the same period three years ago.
While the government may be considering restrictions to pension freedoms, research shows most people would prefer to keep them.