pension withdrawal

Common Sense Prevails



Posted on: 10th August 2020

Those people who have done independent research along with pension advice and avoided the surge of raiding their pensions during the pandemic are beginning to see a 17% drop in conducting pension withdrawal during lockdown.

On July 31st, HMRC reported that 2.3bn in pension withdrawals highlighted 2020’s second quarter in lockdown’s peak. Whilst this number seems large, it is down from the same period in 2019 where withdrawals were recorded at 2.8bn.

Since the introduction of pension freedoms in 2015, flexible withdrawals have a total figure of £37bn so far.

On average, around £6,700 has been withdrawn in the quarter which falls around an 18% decrease from the second quarter of 2019. Whilst withdrawals have had a steady fall there is an expected peak to run alongside the beginning of the upcoming tax year, however, the effects of the coronavirus has seen a reversal this year.

Whilst the number of individuals choosing to access their pensions had increased by 1% to the figure of 340,000, it is still down from individuals who plunged into pensions previously by 8,000. This was classed as a result of Covid-19 impact.

Due to the tax authority only collating data on flexible tax payments, tax-free funds are not inclusive in the findings.

With COVID giving some instability in the stock market that would, in turn, reduce pension fund values, the relief has been in savers not relegating themselves into a state of panic and cashing out. Instead, savers looked to reduce withdrawals and offset values of investment and dividend payments.

Since the introduction of records payouts are the lowest per individual and the usage of emergency cash reserves to aid income from their pension during this tough period is a productive approach, so as not to deplete their pensions on the road to retirement.

To see savers using common sense during these tough times and discussing with independent financial advisors, evidence suggests that many people were thinking ahead with their plans to provide a secure retirement when faced with an enormous challenge of survival in the face of an unforeseen outcome should markets plunge.

For pension advice Manchester and retirement planning Cheshire and how to successfully navigate through your plans and discuss how to make a pension withdrawal, contact Haven IFA the best independent financial advisers in the UK.