Asked by: James Frith (Labour - Bury North)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what estimate he has made of the number of people who have withdrawn their retirement savings from a private pension in the last 12 months; and what assessment he has made of the long-term effect of the early withdrawal of those retirement savings on the retirement incomes of those people.
Answered by John Glen
Between Q2 2016 and Q1 2017, individuals accessed over £6.4 billion from defined contribution pension pots through 1.4 million payments.
Early evidence collected by the Financial Conduct Authority (FCA) and HMRC suggests that individuals are making decisions to cash in small pots while drawing down a steadier income stream from larger pension pots. However, as of March 2017, 5.8 million defined contribution pots eligible for withdrawal, or 80% of all eligible pots, remained untouched. Overall it is too early to draw definitive behavioural lessons from the data that is currently available on withdrawals from defined contribution pots, given that pension freedoms have only been in place for little over two years.
The FCA is also undertaking a review of the post-freedoms retirement market and published its Retirement Outcomes Review interim report in July 2017. The final report is due to be published in the first half of 2018. The Government welcomes the FCA’s work in this area, awaits the publication of the final report, and will carefully consider any recommendations contained within it.