ABI: £2.4bn withdrawn from pensions post-freedoms

Savers have withdrawn £2.4bn from pension pots in the first three months of the new freedoms, according to the Association of British Insurers.

Figures from the ABI show £1.3bn has been paid out in cash lump sums, with an average payment of around £15,000.

An additional £1.1bn has been paid out through 264,000 drawdown payments, with an average payment of around £4,200.

In July the ABI said £1.8bn had been taken out of pensions during April and May.

However the trade body says comparison cannot be made between the data because the figures have since been restated. It would not reveal what adjustments had been made.

Investment in drawdown totalled £1.3bn – with an average fund size of around £68,000 – while £990m has been spent on purchasing annuities.

However, 55 per cent of people buying annuities bought from their existing provider. By comparison, 45 per cent of people purchasing drawdown products did so from their ceding firm.

ABI director for long term savings policy Yvonne Braun says: “These figures are a testament to how well pension providers have adapted to the radical new approach to pensions which came into force on April 6th. They also show the popularity of the reforms.

“Many thousands of people have accessed their savings to get extra cash as they approach retirement. Meanwhile annuities, which guarantee an income for life, and income drawdown are proving attractive to those with larger pension pots.”