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Pensions avoid cost of Christmas as new rules bed in

New data from HMRC (available here) gives the latest update on the number of people and the amount of money being taken from pensions.

  • Retirees did not appear to tap into their pension to fund the cost of Christmas. Amount withdrawn from pensions fell in Q4 2017 and ended up having least money withdrawn (£1.504 billion) throughout the whole of 2017.
  • Withdrawals seem to have settled down at between £1.5 billion and £1.6 billion per quarter.
  • Number of payments continues to increase as more and more people choose drawdown to provide their income in retirement, although the rate of growth has slowed.

Nathan Long – Senior Pension Analyst at Hargreaves Lansdown:

"Rather than use pensions to splurge on an extravagant Christmas, retirees have operated restraint when managing their pensions showing the new rules are bedding in nicely and the amount being withdrawn is stabilising. The number of payments made has increased, but this could simply be a reflection of more and more people using drawdown for their income in retirement. Someone drawdown to provide a monthly income will have three payments in each quarter, so we should expect these number of payments to continue to grow as more and more people choose this strategy. The fact the rate of growth is slowing actually shows that the dash for cash is abating and retirees are facing up to managing their pension pot to provide for their life after work."