Pension Freedoms “Deduct Much” From Pensioner Pots

The Association of British Insurers (ABI), said that a small portion of people aged 55 and over had deducted much from their pension pots.

However, the organisation also said that the individuals are making some sensible decisions regarding where they spend their pensions.

About half of those withdrawing money from their pots in the first three months of 2016 had taken out about 1% or less the value from their pots. About 3,379 people had taken out more than 10% from their pensions and some have even withdrawn their entire pension pots.

The ABI said most of these individuals invested their money elsewhere or have had multiple small pension funds.

“Most people are taking a sensible approach,” said Yvonne Braun, the ABI’s director of policy, long term savings and protection.

“However, the data also suggests a minority are withdrawing too much too soon from their pension pot – 4% of pots are having a tenth or more withdrawn – and many other customers are taking their entire pot in one go.”

The ABI wants the government to investigate why this is happening.

“This is a warning sign that requires further investigation. We need a full picture of these customers’ circumstances and income,” said Ms Braun.

A government spokesperson said keeping their annuity incomes was “the best option for the majority of people” but said that people should have the right to make the decision that is best for them.

“We are working with our partners, such as Pension Wise and the Department for Work and Pensions, to ensure consumers are protected and that there is clear information to help people understand their options,” they added.