85,000 pension withdrawals

What we now know is that 85,000 people have taken money out of their pension plans using the new pension freedoms, withdrawing £1.3bn.

That's up until 28th June, so it takes in most of the three months since the launch in 6th April.

60,000 had taken out £1bn in the first two months.

So that confirms that the rate of withdrawal has faded a bit since the opening weeks. No doubt many had been waiting for the new regime to begin and moved quickly to cash in.

It also suggests that the average amount being withdrawn is £15,294, down from £16,666.

What the new figures don't tell is what they did with the money.


Summer Budget Red Book p51

Pension and savings flexibilities 

1.227
Over 85,000 people have taken advantage of the new flexibilities for accessing pensions that were introduced in April 2015. The government believes it is important that all consumers can access free, high quality guidance on their choices. Following the successful launch of Pension Wise in April 2015, the government is extending access to this free and impartial guidance service to those aged 50 and above, and is launching a comprehensive nationwide marketing campaign to further raise awareness of the service.

1.228 The government also wants to ensure that people can access the new flexibilities easily, and at reasonable cost. The government will consult before the summer on options aimed at making the process for transferring pensions from one scheme to another quicker and smoother, including in relation to any excessive early exit penalties. If there is evidence of such penalties, the government will consider imposing a legislative cap on these charges for those aged 55 or over.

1.229 The government wants existing annuity holders to have the freedom to sell their annuity income. The government will set out plans for a secondary annuities market in the autumn, and agrees with respondents to the recent consultation that implementation should be delayed until 2017 to ensure there is an in-depth package to support consumers in making their decision.

Deposit protection cut

Money guaranteed in bank accounts will drop by £10,000 to £75,000 from the beginning of next year.

The change is the result of the strength of the pound in the currency market.

The deposit guarantee is harmonised across the European Union at €100,000, with a revaluation every 5 years.

But the euro has fallen, with the Greek crisis driving it even lower in recent weeks.

The result is that while bank account holders in the eurozone see no change in their level of protection, UK savers will have to put up with a significant reduction.

The Treasury said the change would have been implemented today but it was delaying it until January next year to give the public a chance to adjust to the lower level of protection.

The guarantee has stood at £85,000 since the end of 2010.