Savers rush to withdraw money from pension pots

Savers have withdrawn £1.8 billion in the first two months of the pension freedoms, according to figures from the Association of British Insurers.

In April and May, savers took out £1 billion in 65,000 cash withdrawals from pension pots. The average pot taken was £15,500.

There have also been 170,000 withdrawals from income drawdown policies, worth £800 million.

Savers have bought 11,300 annuity policies, worth £630 million. And 10,300 income drawdown plans have been purchased, worth £720 million.

This compares to £1.2 billion a month in annuity sales at their peak in 2012, when £100 million per month was put into income drawdown products.

The average annuity was purchased with £55,750 in April and May, and the average fund put into drawdown was £69,900.

Since the pension freedoms were introduced, 45% of those buying an annuity shopped around and chose a different provider. Some 52% of those buying an income drawdown product went with a different provider.

ABI Director for long-term savings policy, Yvonne Braun says: “This is an important reminder that tens of thousands of people are successfully accessing the pension freedoms as intended and on the whole the industry has risen to the challenge of giving customers what they want.

“The data shows people with smaller pots tend to be cashing them out while those with larger pots tend to be buying a regular income product.”

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