ABI: 80% of pension withdrawals made by under 65s

Eight in ten cash lump sum withdrawals post-pension freedoms were to savers under the age of 65, data from the Association of British Insurers reveal.

The figures also show around 60 per cent of all cash paid out in the first three months of the reforms went to savers younger than 60.

Of those who took a cash lump sum, 95 per cent withdrew the entire pot.

Over the same period, 42 per cent of drawdown payments went to under-65s.

Overall, providers paid out almost £2.5bn in cash and drawdown payments in the first three months since pension freedoms.

ABI director of long-term savings policy Yvonne Braun says: “The majority of people have only been cashing in relatively small pots which account for a tiny proportion of all the money which could have been released. This shows that on the whole the British public are taking a sensible approach.

“The changes which came into effect on 6 April revolutionised the world of retirement savings, now the country needs to ensure as many people as possible can make the most of them.”

On Saturday the ABI published its response to the Treasury’s consultation on reforming tax relief.

It backs a flat-rate of upfront relief, dubbed a “savers’ bonus’, set at around 30 per cent.