Retirees take sensible approach to pension freedom

Based on the first year’s statistics, retirees are taking a sensible approach to pension freedom according to the Association of British Insurers (ABI).

The ABI’s own statistics show that the majority of retirees, 57%, withdrawing less than 1% of their pension pot in the last quarter to April 2016. However, the ABI warned that there are signs that a minority of retirees could exhaust their retirement pot in less than a decade. It said that 4% of savers withdrew 10% of more of their pot in the last quarter, although it said the statistics could not show if savers have multiple pension pots or other sources of income. Overall, in the first 123 months of pension freedom £4.3 billion was paid out in 300,000 lump sum payments, with an average payment of £14,500 and £3.9 billion has been paid out via just over one million drawdown payments, with an average drawdown payment of £3,800.

ABI director of policy, long term savings and protection, Yvonne Braun, commented: “This is our most detailed analysis of customer decisions to date following the introduction of the pension freedoms. The data shows that the freedoms have been implemented successfully and are working as intended.”