"Reassuringly, the average withdrawal amount continues to fall, down 5% in value compared to a year ago"
Since the pension freedoms were introduced in 2015, the total value of flexible withdrawals from pensions has reached almost £33bn.
Similarly to Q3 of 2019, Q4 saw 327,000 individuals withdraw from pensions, a 24% increase compared to Q4 2018.
The average amount withdrawn per individual in Q4 2019 was £6,800, falling by 5% from £7,200 in Q4 2018.
Since reporting became mandatory in Q2 2016, average withdrawals have been falling steadily and consistently with peaks in the second quarter of each year - the beginning of the new tax year - becoming a noticeable trend.
Steven Cameron, pensions director at Aegon, commented: “Today’s figures show the UK public’s love affair with the flexibility pension freedoms offer continues to hot up with a record number of 828,000 payments in Q4 of 2019. Reassuringly, the average withdrawal amount continues to fall, down 5% in value compared to a year ago, suggesting individuals are exercising restraint around how much to take as an income.
“Even in times of uncertainty as we’ve seen in recent months ahead of Brexit, there appears to be no resurgence of desire for the guaranteed income on offer from annuities. This may not be surprising though with interest rates continuing to languish at rock bottom levels, making the amount paid out from annuities look particularly unappealing.
“With people living longer, proper retirement planning is needed to safeguard people’s wealth, particularly if choosing to use flexible drawdown in retirement. Here, retirees remain invested in the stockmarket raising concerns over the impact a major fall could have on their retirement prospects including the risk of running out of money if they withdraw too much too soon. Seeking professional financial advice can give peace of mind that your financial affairs are being taken care of, whether that’s about having enough secure income to cover the basics, taking a sustainable regular income, or investing wisely.”
